What are personal loans Used
Personal loans are used by individuals for different personal matters. For example, a person in Jordan can take out a personal loan to cover medical bills, wedding costs, university tuition among other needs. Personal loans are usually a small amount when compared to an auto loan or home loan. On top of that, the payment terms of a personal loan are usually much easier than other loans (personal loans are usually to be paid within 8 years). You are also able to receive these loans without a salary transfer to the bank or the financial institution offering the loan.
High Interest Rates
One of the pitfalls of personal loans, especially in Jordan, is the very high interest rate they come with. The high interest rate is due to the personal loan not being secured on any asset. You need to really think about this point before taking out a personal loan. Many Jordanians find themselves in financial turmoil after taking out a loan they cannot pay back. Before taking out a personal loan, do the proper calculations based on your income and expenses to see whether you can afford the monthly payments or not. Compare personal loan options in Jordan and find the right one for you here
Not a Credit Card Replacement!
Many argue that taking out a personal loan is a great alternative to using a credit card. Since the personal loan gives you all of your money upfront, and given that the payments are set each month, there is less ambiguity in having personal loans than getting a credit card. You need to understand that a loan is not easy money, and that much like a credit card, you will be paying back the money you borrowed. However, unlike a credit card with a low interest rate, a personal loan is paid back in bigger amounts due to the high interest rate.
Proof You Can Pay Back the Loan
Since a personal loan is unsecured, you need to be able to show the bank that you can payback the money. Personal loans are known to be processed quickly and easily if you have a good credit score and a job even without a co-signer/guarantor. However, without a good credit score, you are unlikely to receive a personal loan without proving that you can pay it off. In this case, you would need to have a co-signer who will take the responsibility of paying back the loan if you fail to do so yourself.
The Islamic Financing (Shari’a compliant) Option
There is an Islamic Bank option for personal loans as well. Often, the bank will simply buy the item you need and resell it to you at a higher price through installments. If you need a personal loan without wanting to buy a specified item, the bank will sell you stocks and then buy them back from you directly. This way the bank bypasses the Islamic law against dealing with interest.
Personal loans are a great option for some people who are in desperate need for cash. However, keep in mind that with the wrong bank, even a small personal loan can have you paying off installments for years to come. Make sure you compare as many banks as you can to get the best deal on a personal loan in Jordan. To compare personal loans with the click of a button, visit AmwalCom.
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