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A personal loan is a loan that can be written for a variety of reasons. Perhaps you need to purchase big ticket items or appliances, pay for classes at the local college, or even take a vacation or cruise. A personal loan is perfect for these types of expenses and more. Personal loans can be obtained without all of the hassle that is involved with other types of loan products, and you can have your money in no time when you apply for a personal loan. Personal loans are available for all borrowers with all types of credit.
Secured Vs. Unsecured Personal Loans
There are two basic types of personal loans - the secured personal loan and the unsecured personal loan. Although both types of these loans can be used for similar purposes, there are important differences that you should be aware of before you decide on which to choose.
The secured personal loan is by far the easiest option to be approved for, even for those borrowers with less than appealing credit files and derogatory credit reports. Secured personal loans are also cheaper overall because banks, credit unions, and other lenders charge far less interest on the secured loan, as it is a far less riskier type of loan instrument.
Secured loans are also written for longer periods of time than unsecured loans and thus have lower monthly payments. The exact opposite attributes are applied to unsecured loans. They are harder to be approved for (especially for high risk borrowers with bad credit), cost more in terms of interest as a result of their risk, and must be paid back sooner with bigger monthly payments.
Which Is Right For You?
Choosing the right personal loan for you is a big decision. For those borrowers with fair credit ratings, the unsecured loan makes the most sense. For those borrowers with poor credit ratings, or those borrowers who wish to borrow a more significant amount of money, the secured personal loan may be the only available option. Be sure to factor in the interest rate on any personal loan before you agree to take the loan.
Oftentimes, the difference between being approved for an unsecured loan (and thus lower interest) and being turned down may be applying with the benefit of a cosigner. A cosigner is simply someone who knows you well and agrees to assume responsibility for the repayment of your loan if you should fail to honor your loan agreement in any way. A cosigner can be a parent, relative, friend, coworker, or other individual.
Another Option
For those borrowers who have truly horrible credit, a personal loan may be best obtained by going for a payday loan or cash advance loan. These loans feature a near 100% approval rating because there is no credit check involved, and amounts are available up to $1500 or more, depending on your income. Anyone with a job and a checking account can qualify for this type of personal loan, although on the negative side, borrowers should be aware that the loan must be repaid in full on their next scheduled payday, or oftentimes two weeks to one month later. |
