Personal Loans: A Complete Guide

man holding open wallet empty

Money is the last thing you should be worrying about during a personal emergency. Unfortunately, the world revolves around money, and emergencies mean unexpected expenses. And that can add some insult to your injury. In such cases, personal loans can be of great help.


You may have heard of personal loans but are unsure of what they are and how to get them. Well, the following discussion can provide a complete guide on this matter.



What Is A Personal Loan?


Personal loans are typically moderate sums of money you borrow from a bank or online lending service to cover unexpected expenses.


For instance, lenders grant personal loans to people who might have fallen into sudden debt or are facing overwhelming medical bills. Personal loans can also be for weddings, home renovations, and such.


Emergencies are kind of expensive for the average wage earner. That’s why lending services help them out by offering this type of loan. When you take a personal loan, you will repay it in small instalments over agreed time intervals with interest.


Like at ETF Capital, you will make weekly payments of small amounts. So, if for example you take a loan of $10000 and agree to return it within one year (52 weeks), you will pay back around 240$ every week. In total, you will pay back 12,500 dollars for your $10000 loan.


However, you can reduce the extra amount by returning the money sooner to your lender. In that case, you will be paying larger weekly instalments. So, if you return the $10000 loan to ETF Capital in six months (26 weeks), you will only pay $11,248. Here, your weekly instalments will be around 432$.


Lenders give out personal loans with a specific intention. That is, they are trying to help you tackle an unexpected situation. So, they might restrict its use for unintended purposes, such as paying a fee, college tuition, or buying a vehicle. Plus, the loans are not big enough to cover an entire student debt or a complete mortgage.



Different Types Of Personal Loans


There are two types of personal loans. The differentiation among them depends on the condition that underlies the borrowing of the money.


Secured Personal Loans


A secured personal loan is where your lender demands collateral. This can be financial assets or an item of value, like your car. If a borrower refuses or fails to pay back the loan, the lender can take over the collateral and use it to manage his damage.


The advantage of secure loans is that you can usually get a larger amount. For example, at ETF capital, secured loans start at $10000 and can go as high as $20000. You have to return the money within six months to 3 years. For collateral, ETF will accept a motor vehicle that the borrower properly owns.


Unsecured Personal Loans


Unsecured loans are personal loans that don’t require any security. In other words, the lender will not hold any of your assets hostage in order to ensure that you repay the loan. This puts the bank or lender at significant risk. As a result, the amount of this loan is usually smaller.


At ETF capital, unsecured loans start at $2000 and can go only up to $10000. You will return the loan within six months to 3 years. This loan can help you take care of emergency hospital bills or other small but considerable unexpected expenses.



How To Get Personal Loans?


You can apply for personal loans from credit unions, banks, or internet-based lending services. Among these, online services, like ETF capital, are the most convenient choice. Because you can easily take care of the whole operation by clicking on a few links and filling out some online applications. However, the lender only approves if you meet the eligibility criteria.


Who Is Eligible For A Personal Loan?


Even after applying conditions and collateral, a lender is always at some risk when giving you a loan. So, they make sure you fulfil specific criteria. These criteria provide them with an idea of how likely the individual is to return their money.


Age: In most countries and regions, you must be at least 18 to apply for a personal loan. It makes sense because this is a likely age when someone might be responsible for bearing expenses. Anyone younger can have their parents or guardians tackle the emergencies for them.


Contact info:  These days, all services require a valid email and mobile number. And online lending services are no different. Apart from maintaining contact, this information also helps the organization to verify your identity.


Citizenship: Lending services will grant loans to individuals who reside in their locality. For instance, ETF Capital only gives personal loans to Australian citizens, residents, or those with work permits.


Internet banking: Online lending services will naturally need a bank account connected to the internet to carry out the transactions. So, make sure you have a budget that permits internet banking.


Income and cash flow: You cannot repay the loan in regular instalments unless you have a consistent source of income. So, the lenders will want to ensure you have a stable income. For that, they might require employment documents. You may also have to submit recent bank statements as proof of regular financial activity.


Application Process


First, you need to submit an online application. These are usually online submission forms where you can also upload all the required documents. Here, the ETF Capitals registration form for personal loans can be a good example.


The documents required with the ETF form include two recent payslips, your bank statements for the past three months, passport/driver’s license photocopy, and a medicare/bank card.


These requirements might slightly differ in the case of other lenders. However, the main idea is to prove your identity and financial stability. ETF also offers you the option of emailing these documents.


After you submit the application and the documents, a loan specialist will consider your application. They might refuse your request with a short email if there are some major eligibility issues. Otherwise, they will contact you and discuss the loan further.


If everything goes well, the lender will then state the terms and conditions of the loan and draw up a contract. You might sign the contract electronically. Or, you can choose to print the agreement out, sign it manually and upload the signed contract as a pdf. The lender will then send the requested loan to your bank account.





Personal loans can be of immense help during emergencies. However, before applying for loan, make sure that you understand the interest rates, fees, and terms and conditions.

If you fail to uphold your end, it can significantly damage your credit score. Plus, your lender might even sue you or take away the collateral. So, that’s something you should look out for.