Personal finance loans can be a great tool for getting out of debt or even for starting a business. They are relatively easy to get if you have a decent credit score. Plus, you can get personal finance loans from your bank, your credit union or online.
Two types of personal finance loans
There are two types of these loans. They are secured and unsecured. Secured personal finance loans are those where you secure or collateralize the loan with an asset. Most people who get one of these loans “pledge” their house as collateral.
Unsecured personal loans
Unsecured loans are those where you are not required to provide something as collateral. They are sometimes called signature loans because really all you have to do is sign for one. They generally come with a higher interest rate because the lender is taking more of a risk in that there is no asset it can seize should you default on the loan. All the lender can do in this case is hassle you for payment or turn over the loan to a collection agency to harass you.
The advantages of personal finance loans
If you’re heavily in debt one of the biggest advantages of personal finance loans is that you can use one to pay off all your creditors at once. This can save you both money and stress. You’ll have just one payment a month, rather than the five, six or more you have now, plus you’ll have more time to pay off the loan. You’ll be spreading repayment over a longer period of time so should also have a lower monthly payment.
Where to go for personal finance loans
As noted above, there are a number of places you can go for personal finance loans. If you have a good relationship with your bank this could be a good place to start. However, banks can be a bit stodgy and you might find friendlier customer service at a credit union. This is because they are owned by their members and aren’t under as much pressure to make profits as are banks who have shareholders to keep happy.
You can comparison shop for a personal finance loan online. Two of the better sites for these loans are www.eloan.com and www.quickenloans.com. In both cases, you’ll need to fill out just one application form to get offers from multiple vendors. In other words you can comparison shop for personal finance loans without ever leaving home.
Do be careful
If you feel your best alternative would be to get your loan online, do be careful. There are some real scam artists out there just waiting to pounce on unsuspecting borrowers. Also, be sure to read everything before you sign anything–so you’ll understand all about the loan, especially the interest rate you’ll be charged.