Understanding Personal Loans
The first thing to understand about secured and unsecured personal loans is that you are not likely to get one from a traditional lender such as a bank or credit union unless you already have some sort of relationship with the institution. Brick and mortar establishments have put their personal loan benchmarks so high that even folks with good incomes, low debt loads and squeaky-clean credit histories have trouble getting them. Private lenders have stepped in to fill that breach and most of them can be found on the internet. You can find some good, honest deals there.
Credit Histories, Income and Debt Loads
While lenders willing to grant secured and unsecured loans will certainly take your credit scores into account, the deciding factor will be your income and your debt load. Lenders want to be sure you have enough money left over after you meet your necessary monthly obligations. Your credit scores will probably have some affect on the interest rates you are charged. Do not worry too much about credit scores, most secured and unsecured personal loans are approved on the basis of income and current debt.
Understanding Secured Personal Loans
When a loan is secured, that means that it has collateral to back up the amount of the loan. Collateral can consist of just about anything of real value. Usually it comes in the form of real estate, most often a home. Stocks and bonds, a late model automobile or maybe even the silver tea service tucked away in the family chest would be acceptable. You and your lender can discuss acceptable collateral and its worth. Should you default on the secured personal loan, the lender will have legal recourse to recoup the cost of the loan by taking the property and selling it.
Benefits of a Secured Personal Loan
Though it may be risky for the borrower to present property to secure the loan, it certainly heightens the security the lender feels about the deal. Because of this, loan amounts offered can be higher, interest rates and fees can become very reasonable, and repayment terms quite comfortable. Even with a bad credit history, collateral eases the way for the granting of a secured loan. Despite the ease that collateral may offer, do not have any other debt problems hanging over your head. Clear any of that up before you go shopping for any kind of loan.
Understanding Unsecured Personal Loans
Your signature and your promise are the only things that guarantee an unsecured personal loan. Here is where your income, your debt load and, to a degree, your credit history will come into play. If a lender has only your promise that you will repay, and you have a history of not quite keeping promises, the lender will have no choice but to boost interest rates to a degree that offsets the riskiness of the loan. Loan amounts may be smaller and pay-back terms may be a little tight regarding the payment amounts and when the loan becomes finally due. Of course, this will depend on the amount of the loan.
Online Shopping for Secured and Unsecured Personal Loans
The good thing about shopping for your secured or unsecured personal loan on the internet is that you will have scores of lenders to choose among right there in front of you. Since traditional lenders have eschewed the personal loan market, many private lenders have stepped in to fill the gap. You should find competitive interest rates and repayment terms. Just check out the reputation of any lender before you start to do business and make sure any web page you use to divulge personal or financial information is secure.