Personal loans are a lot different from bank loans. At least there are 5 different points that differentiate between those 2 loans.
If you are planning to get a loan, it will be better if you know what makes it different between those 2 kinds of loans before you get one.
Who Gives the Loan
The first difference between a bank loan and personal loan is the one who gives the loan. If you have savings in one specific bank, you are able to directly or indirectly get a loan from your bank.
It is then called a bank loan. While for a personal loan, the loan is given by private sectors that do not require you to be tied to them in any matters than getting the loan.
You can find a personal loan more on the internet. It is then called an online personal loan.
The Amount of Money Loaned
Another difference between a personal loan and bank loan is the amount of money that can be loaned.
Bank customers can get a loan only if the amount of money loaned is about $10,000. On the other hand, if you want to get a loan with not really much amount of money, a personal loan might be more suitable for you.
Especially through an online personal loan, you can get a loan only for hundreds dollars.
The Loan Payment
Banks usually give a long time for you to repay the loan they gave. However, this causes the installment payment and debt interest increase. But if you get a loan from the personal one instead of a bank loan, the payment time is relatively short so that you are able to avoid increased debt interests within a middle-term or even long-term.
This sometimes causes a misunderstanding in calculating credit fees or total annual fees.
Sometimes a personal loan seems to be heavier because you must pay the installment payment which is a little bit more than a bank loan every month.
It is because the bank asks you to repay the loan in a long-term while a personal loan allows you to repay the loan within months.
The Purposes of Getting a Loan
Usually, banks will ask your purpose why you want to get a loan. Whether you will use it to buy a car, to pay a college fee or anything. But you won’t be asked if you get personal loans.