{"id":19611,"date":"2021-08-20T08:16:53","date_gmt":"2021-08-20T08:16:53","guid":{"rendered":"https:\/\/payment1.com\/?p=19611"},"modified":"2026-06-23T01:08:12","modified_gmt":"2026-06-23T01:08:12","slug":"what-is-a-personal-loan","status":"publish","type":"post","link":"https:\/\/payment1.com\/es\/2021\/08\/what-is-a-personal-loan\/","title":{"rendered":"Pr\u00e9stamo Personal: Una Gu\u00eda Completa desde la Solicitud hasta el Pago"},"content":{"rendered":"

Credit cards are not the only way to consolidate debt, finance purchases, or get quick access to emergency funds. <\/span>Pr\u00e9stamos personales<\/span><\/a> are a fantastic option for people looking to get big-ticket items or meet any potential shortfall within a home. But what is a personal loan, exactly? How does it work? How do you make sure you can pay it off on time?\u00a0<\/span><\/p>\n

Here’s everything you need to know about personal loans \u2013 from application to paying it off. If you’re allergic to borrowing money because of its complicated nature, this should make it a little easier.<\/span><\/p>\n

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What is a Personal Loan?<\/span><\/h2>\n

Personal loans are money you borrow from an entity, usually a bank or a different financial institution, carrying a fixed repayment schedule and consistent monthly payments. These are unsecured loans too, which means they don’t require borrowers to set any existing asset to work as collateral for the money.<\/span><\/p>\n

Unlike some loan types, you don’t need to justify the reason for applying for a personal loan. In addition, borrowers are not restricted to where they can use their loan money, compared to home or car loans.<\/span><\/p>\n

Much like any loan, these are provided by banks under several criteria, which include but are not limited to credit score, income level, repayment capacity, history of employment, and more. Since it’s unsecured, lenders cannot auction your properties under collateral. Hence you can expect a slightly higher interest rate.<\/span><\/p>\n

But perhaps the best part of a personal loan is its <\/span>fixed interest rate<\/span><\/a>. It also uses a fixed repayment timeline, which makes it easier for clients to figure out their entire loan. So whether you’re looking to use it for higher education or considerable medical contingencies, getting a personal loan can save you during a rainy day.<\/span><\/p>\n

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How Does a Personal Loan Work?<\/span><\/h2>\n

Suppose you plan on getting a personal loan. In that case, the first step is to start the application process with the financial institution of your choice. It can be a bank or any qualified lending company. Still, completing an application form and providing all required documents starts.<\/span><\/p>\n

Personal loans value in amount, usually around $1000 up to $100,000 for some finance agencies. The interest rates for a personal loan can range between 2.99% and about 36%. Borrowers will also get somewhere between one to seven years of repayment time.<\/span><\/p>\n

Once you submit your application form, including your choice of amount and repayment schedule, all you can do is wait. Depending on the financial organization, you will likely get an answer within a few hours or several days. If you <\/span>get loan approval<\/span><\/a>, you will get an almost immediate disbursement and can use the funds for whatever purpose.<\/span><\/p>\n

You would also receive your first date of payment, which is likely a few weeks after your loan. On-time payments will reflect positively on your credit history and vice versa. In addition, lenders will continue reporting your progress, so it’s vital to pay your bills on time.<\/span><\/p>\n

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What You Need To Know When Applying for a Personal Loan<\/span><\/h2>\n

Understanding the black and white is essential to learning how personal loans work. These specifics can help you understand the moving parts of your loan and enable you to pay on time. Some of the crucial details of a personal loan that every borrower must realize include the following:<\/span><\/p>\n

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Monthly payments<\/span><\/h3>\n

These are your fixed monthly payments, calculated using the value of the principal and interest. Depending on how long your repayment timeline is, you can get a much lower monthly due but a higher interest rate over time.\u00a0<\/span><\/p>\n

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Annual percentage rate (APR)<\/span><\/h3>\n

Personal loans usually charge a fixed <\/span>APR<\/span><\/a>, which changes according to creditworthiness, personal income, and more. This also determines the interest rate of the loan throughout its lifespan.\u00a0<\/span><\/p>\n

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Repayment timeline<\/span><\/h3>\n

This is the period the lender gives you to pay off your loan. On average, a personal loan usually has between one to seven years for its timeline.\u00a0<\/span><\/p>\n

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Origination fees<\/span><\/h3>\n

These are usually fees on top of the original principal, generally around 6% of the total principal.\u00a0<\/span><\/p>\n

Your loan rates vary depending on your lender. Many set a fixed APR for borrowers, which means you’ll know how much you can expect to pay over your repayment period. Your APR comes from different factors, including your existing credit score.\u00a0<\/span><\/p>\n

Those with a good credit score can qualify for the lowest rates, with the best rates available only to those with a credit score above 700. Annual income and payment history can also be a factor. The APR will also include fees incurred by the lender.<\/span><\/p>\n

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How To Apply For A Personal Loan<\/span><\/h2>\n

Here’s a step-by-step guide on how to get a personal loan.<\/span><\/p>\n

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1. Figure out how much money you need<\/span><\/h3>\n

To avoid stretching your finances too thin while repaying the debt, ensure you run the numbers before taking out a loan. Decide how much money you need and consider the monthly payments and the other fees that come with the loan.<\/span><\/p>\n

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2. Check your credit score<\/span><\/h3>\n

Know where you stand; lenders will surely do. If your score is lower than the lenders require, consider waiting until you have improved your credit standing. However, getting a loan with a low credit score is still possible. You just have to expect the interest rates to be higher.<\/span><\/p>\n

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3. Decide which type of loan to get<\/span><\/h3>\n

Once you know your credit score and how much money you need, it’s time to determine the type of loan that best suits your needs. We will get into more details later, but the different types of loans include secured and unsecured loans, personal lines of credit, and debt consolidation loans, to name a few.<\/span><\/p>\n

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4. Shop for the best rates<\/span><\/h3>\n

Take your time looking for the best interest rates. Don’t settle for the first offer you get. If there is a bank or credit union you’ve been a member of for a long time, consider going to them first. Some lenders allow you to get prequalified via a soft credit check. This will not impact your credit score, so take advantage of it if available.<\/span><\/p>\n

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5. Choose a lender and submit the required information<\/span><\/h3>\n

After researching, it’s time to pick a lender and submit your application. Lenders vary in the requirements they ask from borrowers. Still, in most cases, you must provide your complete name, contact information, employment details, income, and reason for the loan. To speed up the process, gather and make copies of all the documents you may need \u2014 payslips, driver’s license information, proof of residence, etc.\u00a0<\/span><\/p>\n

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6. Accept the loan and start paying<\/span><\/h3>\n

Once approved, the last step would be to accept the terms and conditions and finalize the loan. You will receive the funds in one to two business days. It is best to set up automatic payments to ensure you don’t miss any.\u00a0<\/span><\/p>\n

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How To Get Your Personal Loan Approved<\/span><\/h2>\n

Is there a way to boost your chances of getting your personal loan approved? Unfortunately, there definitely is no universal formula for this. However, all lenders have one thing in common: they want to be paid back on time. So, here are a few ways to boost your chances.<\/span><\/p>\n

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I<\/span>mprove your debt-to-income ratio (DTI)\u00a0<\/span><\/h3>\n

A lower ratio (monthly debt payments divided by your monthly income) can show that you have your debts under control and can take more. You can improve your DTI by taking a side hustle to increase your income and do what you can to decrease your debt.<\/span><\/p>\n

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Don’t borrow too much money<\/span><\/h3>\n

Asking for too much money may decrease your chances of being approved, which is why it is crucial to run the numbers first and only borrow the amount you need.<\/span><\/p>\n

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Consider getting a co-signer<\/span><\/h3>\n

If you are unsure if your credit score can make the cut, ask someone to co-sign your application. A co-signer must have a better credit score and income and can afford the risk since they will repay the loan if you default.<\/span><\/p>\n

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Types Of Personal Loans<\/span><\/h2>\n

As mentioned before, different types of personal loans depend on your needs. Here are some of them.<\/span><\/p>\n

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Secured personal loan<\/span><\/h3>\n

This personal loan requires you to put up collateral before taking out the loan. For example, you can use your vehicle as collateral. This is also known as a <\/span>Pr\u00e9stamo sobre t\u00edtulo<\/span><\/a>.<\/span><\/p>\n

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Unsecured personal loan<\/span><\/h3>\n

This, on the other hand, does not require collateral. However, you can expect the interest rates to be higher since the lender assumes more risk.<\/span><\/p>\n

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A personal line of credit\u00a0<\/span><\/h3>\n

This works best for people after a safety net from which they can get funds as needed. It works as a usual credit line, and you acquire interest from the amount you draw.<\/span><\/p>\n

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Pr\u00e9stamo de consolidaci\u00f3n de deudas<\/span><\/h3>\n

This allows you to roll all your debts into one single loan. This works best if the new APR is lower than the interest rates of your current debts.<\/span><\/p>\n

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3 Things To Consider When Choosing A Personal Loan Provider<\/span><\/h2>\n

You will be dealing with your loan provider for the duration of your paying months or years, so do due diligence in choosing your provider. Here are a few things to consider.<\/span><\/p>\n

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Application process and processing time<\/span><\/h3>\n

The shorter the processing time, the better. Choose a loan provider that has a straightforward process and can get back to you within 72 hours after you’ve submitted all the requirements. Also, some <\/span>lenders can process your application online<\/span><\/a> \u2014 a convenience most of us need.<\/span><\/p>\n

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Interest rates and hidden fees<\/span><\/h3>\n

Thoroughly review the lenders that you consider and choose one with the most attractive rates. Banks and <\/span>other non-banking financial institutions<\/span><\/a> charge high processing fees, so watch out for those, too.<\/span><\/p>\n

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Brand trustworthiness<\/span><\/h3>\n

Just as the lender checks your credit and background, you must also ensure that the institution you work with has credibility. Check for online reviews and loan policies before making a decision.\u00a0<\/span><\/p>\n

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Alternatives to Personal Loans<\/span><\/h2>\n

If personal loans may not be the most suitable and convenient for you, you may consider the following alternatives.<\/span><\/p>\n