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Each year, millions of Americans rely on personal loans to consolidate their debt, pay for any unexpected expenses, make home improvements, and more. According to TransUnion, the number of people with personal loans has increased in recent years from 23 million to over 27 million. With the growing popularity, the experts at National Exchange Bank & Trust have outlined some key components to keep in mind when getting a personal loan.

How Personal Loans Work

Personal loans are a borrowed, fixed amount of money that you pay (with interest) in monthly payments over the life of the loan. Most personal loans have a typical duration of anywhere from 12 to 84 months (longer for home loans), depending on different variables and details. Once you have paid your loan, and any interest, back in full, your account is then closed. If you are in need of more money, then an additional application for a new loan is required.

Personal lines of credit work in a similar way, but instead of the account closing when the loan is paid, the line of credit is available to the borrower for additional purchases.  Examples of this would be a credit card or home equity line of credit.

Types of Personal Loans

There are two main types of personal loan options, secured and unsecured. The difference between these types of loans can be crucial to your assets, so understanding how they differ is extremely important.

  • Unsecured loans are not backed by any kind of collateral. The lender is responsible for deciding whether or not you qualify for this loan based on your financial history and will recommend you for a secured loan if you don’t qualify or if you’re looking for a lower interest rate.
  • Secured loans are backed by collateral, and, if you are unable to make your monthly payments, then your lender has the right to claim your collateral asset(s) as payment for the loan. Home loans and vehicle loans are secured by the home or vehicle.

What Are Personal Loans Used For

The people you know and trust at National Exchange Bank & Trust are experienced lenders who can help you in any financial situation. There are a variety of uses for personal loans, but the most common we see are:

When To Take Out A Personal Loan

Taking out a loan is a big decision, and our team of lending professionals recommend that you should only take out a loan if you know that you can pay it back, with interest, during the life of the loan. A strong credit score is an important feature that banks will look at when seeing if you’re qualified for a personal loan, so keeping this in mind may impact when you can or should take out a loan. There is no season or day of the week that gives you the best chance of being approved for a personal loan, but being financially prepared does.

The National Exchange Bank & Trust Difference

When you feel like it’s time to apply for your personal loan, then put your trust in the lending professionals at National Exchange Bank & Trust. Our loan application process is unique, it can be started online, and you can expect to hear from a personal lending specialist within just a couple of days after submission. Our knowledgeable team is here to help you through the entire process, and has outlined just a few of the many features that National Exchange Bank & Trust provides during the lending process:

  1. Direct communication with your personal lender. At National Exchange Bank & Trust, we do not utilize call centers. Rather, when you partner with us, you will receive a direct line to your lender so that you can call them at any time with questions, concerns, or news that you may have pertaining to your loan.
  2. Interest in establishing, maintaining, and building a long-lasting relationship. Our team of professional lenders is eager to meet you and hear your story. We also want to build a lasting relationship with each of our customers because we truly believe that understanding the person we’re working with will allow us to help you grow and succeed when it comes to your finances.
  3. Going above and beyond to make your dreams come true. The personal lenders at National Exchange Bank & Trust are dedicated to helping transform your wildest imaginations into reality. One of our valued mortgage lenders, Kimberly Klaetsch, was quoted saying that her favorite part of being a mortgage lender is “seeing my customers’ dreams come true.”

And, if you’re searching for more information on how our lending process works, our experts encourage you to read through one of our latest blogs, Let Us LOAN You Some Information, and contact us with any questions you may have.

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