Personal loan agreements

2007-05-02 10:04:19

( Computers )



Personal loan agreements offer a lot of advantages to an average consumer. But before you can truly appreciate what personal loan agreements can do for you, it is important that you first understand what loans really are. Loan is actually borrowing money from a creditor with an agreed upon interest rate. Most interest rates are computer per month and it can accumulate if you are charged a compounded rate.

There are actually two types of interest rates that a creditor can charge you. The first is called the simple interest wherein you are charged a fixed amount of interest per month based on the principal amount you had loaned. On the other hand, the other type of interest is called the compound rate; your interest is higher when you are charged with this kind of interest rate because the interest is no longer based on the principal amount you had borrowed, rather, it is based on the amount of money you currently owe which includes the interest rates that had accumulated.

Generally, loan is granted to an individual with the belief that the individual will be able to pay the loan with interest in the future. Usually, people need to have collateral when they want to avail of loan. But some creditors will accept a written promissory note by the borrower. Business agreements regarding loans are easier to get compared to personal loan agreements. This is because unlike business agreements, personal loan agreements are usually loans that are granted to an individual for his personal uses.

You should note that granting personal loan agreements entails a higher risk on the part of the creditor since the loan he gave was used for consumerist purposes rather than for business purposes. Overall though, there are many creditors that grant personal loan agreements but you should also expect that they will inquire about your capacity to pay so they can be assured that you will be able to pay your loan in the future.


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