Jun
23
How does the personal loan from banks such as Bank of America or Citibank work?
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I just received an offer to apply for a personal loan for up to 35,000 with Bank of America and for up to 5,000 with citibank. I actually need no more than 7,500. The interest rate is between 9,97 and 27,88 based on credit worthyness. I will like to know how it works. I’m hesitating between that and applying for a credit card. My credit score is fair (650). A friend advised me to go for the loan because it’s a guaranteed fixed interest. But since I’ve never done it b4 I will appreciate some more advice. Thanks Much.
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2 Comments
June 8th, 2009 at 9:16 am
Loans and credit card are quite similar. It really depends on your credit history and your employment status. No company will give you money if you don’t have a job. Loans and credit card interest can be fixed or variable. This is something that you need to talk to the bank about. Don’t apply for a credit card if the interest is not fixed. The only difference is that a loan will require you to pay off at a certain amount of time. This is how the bank calculates your monthly payments. As for credit cards, you can pay off anytime you want but you’ll need to make minimum payments. Since you are only making minimum payments, you can end up never paying off this debt. However, you can negotiate on the interest rate in the future if your credit history improves.
June 11th, 2009 at 6:29 am
Go for the personal loan because it gives you in addition to the fixed interest rate a specified amount of time to pay off your debt. Credit cards, as we all know will only require minimum payment and it can take you as long as 20 years to get out of a 7,500 credit card debt. And also, with the credit card if you only pay the minimum, your card will stay maxed out for a long period of time and that wouldn’t be good for your credit score. With the loan you pay a fixed price every month for 2,3,4 or 5 years and that’s it. But b4 you do any of that, make sure that you are braced to make all future payments on time, b’coz taking the money right now is the easiest part of all. So look into your finances, your job and any alternatives in case some things don’t work as you plan. Draw a plan B and if possible a plan C before you go asking for money. Good luck