A personal loan can be very useful, providing the money that you need for bills, projects, or large purchases when you need it. Unfortunately, many people don’t completely understand what a personal loan is or how to apply for one.
The information below is provided to help you find the personal loan you need, as well as assist you in finding the best interest rates and loan terms for a personal loan.
Defining the loan
A personal loan is one of several types of loans that are granted to individuals to cover expenses, repay debts, or provide financing for larger purchases. These loans can vary from lender to lender, and may be either secured or unsecured… in some cases, the items purchased with one of these loans end up serving as collateral for the loans themselves.
Most of the loans that you apply for will fall into the category of being a personal loan… don’t be confused when you hear these loans being called by other names, since often the names are all referring to the same type of loan.
Interest rates and loan terms
Interest rates for a personal loan can vary, depending upon whether the loan is secured or unsecured and the credit rating of the individual requesting the loan.
A secured loan will almost always have a lower interest rate than an unsecured loan, since the term “secured” means that some item is serving as collateral to guarantee repayment of the loan for the lender.
Along those same lines, the terms of the loan and the monthly payment can vary based upon the income of the loan seeker, their past credit history, the value of any collateral used to secure the loan, and the interest rate that is charged. Some lenders are also more lenient or strict with their loan terms than others.
Shopping for the best loan
In order to get the best personal loan, it’s important to shop around at different lenders for loan quotes.
Don’t restrict yourself to the banks that you’ve done business with in the past… request loan quotes and information from several different banks, and then branch out into finance companies and other lenders.
There are even online lenders that can issue loans with low interest rates to individuals with a wide range of credit histories, using home equity as collateral.
After you’ve collected loan quotes from several lenders, compare the interest rates and loan terms from each to find the best loan to meet your needs.
Once you’ve found it, be sure to contact the same person that gave you the quote and remind them of the terms that they mentioned previously… and make sure that you keep at least one or two other options open just in case some unforeseen difficulty should arise.