A personal loan is a loan that is issued by a lender to a borrower for the borrower’s general usage. These are usually not indicated for any specific use. With some other types of loans, the lender might have several specific restrictions on what purposes the loan money can be used for. This is common for home loans, home improvement loans, and other related loans.
Personal loans can range from a few thousand dollars to several thousands of dollars. The issuing of a personal loan can often depend on several factors, including:
- The borrower’s credit history and loan track record
- The amount of risk involved for the lender
- Local and state lending laws
As mentioned, personal loans can be used for various reasons, according to the borrower’s needs. Most people who take out a personal loan use them for reasons such as:
- Purchasing a car (for instance, if they cannot obtain a car loan)
- Personal expenses
- “Catching up” on debt
- Bad debt lawsuits
- Home-related expenses (repairs, additions, etc.)
- Personal projects (building projects, hobbies, etc.)
- Certain business-related expenses
Unless otherwise specified in the loan contract, there are generally no limitations on the usage of a personal loan.
Disputes and legal conflicts over personal loans can often arise. These can involve issues such as:
- Fraud (either by the lender, the borrower, or both acting in concert)
- Breach of contract
- Misrepresentation of terms
Legal conflicts may require a lawsuit in order to sort out the details of the dispute. Remedies generally include a monetary damages award, adjustment of contract, and, in some cases, criminal consequences.
Personal loans can often vary in terms of amount, payment plans, and interest rates. It may be in your best interests to hire a qualified lawyer if you need assistance with any type of personal loan issue. Your attorney can help when it comes to negotiating loan terms and obtaining a suitable agreement. Also, in the event of any type of legal dispute, your lawyer can help you file a legal claim and can represent you during court meetings.