The process of negotiating the terms of your personal loan can be tricky and stressful. If you’ve never applied for a personal loan, it can be even more confusing to understand.
Before you speak with a lender about obtaining a personal loan, familiarize yourself with the following common personal loan terms so you can get a low personal loan rate. Phoenix Banking Rates provides comparisons of various personal loan interest rates and lenders so you can find an affordable personal loan rate easily.
Collateral: Personal property to offer as a guarantee you will pay your loan back. If you default on your loan, the property may be seized.
Fixed Interest Rate: An interest rate that the borrower and lender agree upon and does not change for the entire term of the loan.
Interest: Additional percentage of the amount borrowed that the borrower is charged, usually monthly, until the principal is paid off.
Principal: The total loan amount, not including interest.
Term: Time limit within the loan must be paid.
Variable Interest Rate: An interest rate that fluctuates over the term of a loan according to an index.
