Lower Interest Loans

Personal Loans
(Types) (Lenders) (Shopping)

Click Here To Go To Free 1-Minute Quote Form

A personal loan is money that you borrow for a variety of reasons such as a vacation, some new furniture and so on. There are several different types of personal loans.

Common Types:

Secured:

With a secured loan you need to have collateral. Collateral is something of value like your home, car or an item worth at least the amount of the loan you are seeking. The interest paid on secured loans is usually less because failure to pay the loan can mean that you could lose whatever you put up as collateral.

Unsecured:

An unsecured personal loan does not require collateral, but because of this the interest charged is often higher. Some lending institutions also charge annual service fees on unsecured loans.

Line of Credit:

With this type of loan, you are approved for a certain amount of credit from which you can withdraw funds as you need them. For example, if you were approved for a $10,000 line of credit, say for home improvements. You might only require $3000 for materials, and could withdraw only that amount. As long as you pay back the amount withdrawn, you can continue to take out as much cash as you need, up to the limit of your line of credit. The full amount of the loan is due by the date specified by the terms of your loan agreement.

The most common type of personal loan is the unsecured type. They are generally processed more quickly than most loans because lenders base their decisions on the information you give on your application and a credit check. Often you can receive approval in two or three business days and your funds become available immediately.

Most lending institutions are quite conservative when it comes to unsecured personal loans. Though not everyone gets approved, if your credit history is good, the chance is excellent that your loan will be approved. Like other forms of credit, if the lender feels there is any risk at all, you will likely be charged a higher interest rate.

Click Here To Go To Free 1-Minute Quote Form

(Back To Top)

Lenders:

It used to be that banks were your only option for borrowing money, but today there are more choices. Here are some of your options:

Banks:

At one time you could go to the neighborhood banker who knew you and getting a personal loan was fairly easy. Today of course, banks are big business and they don't always have the personal edge of years gone by. But still, banks are often the first choice for many consumers. One reason is that most people already use a bank for other services, so it's natural to go there for a loan. Banks are convenient and located in all cities and towns. Some banks however, don't consider a personal loan under $2000 worth their while, and prefer their customers to use a credit card.

Credit Unions:

Credit unions are collectively owned by its members and so they are generally more interested in assisting their member customers. Credit unions also tend to be more willing to offer unsecured personal loans for smaller amounts. Interest rates at credit unions are often better than at a bank. But credit unions are harder to find and don't have a large network of branches. You have to be a member too, but this is usually as simple as opening a checking or savings account.

Click Here To Go To Free 1-Minute Quote Form

(Back To Top)

Shopping for a Personal Loan:

Lenders advertise their interest rates but they don't apply to everyone. Interest rates are based on your credit rating, and the better your score, the lower your interest rate. Your credit report is usually reviewed before the lender quotes you an interest rate.

It pays to shop around because there are a lot of different options out there. Most banks and credit unions have fairly similar requirements and policies, but you should compare interest rates and charges. The Federal Truth in Lending Act requires that all lenders figure out all the costs of your loan including those that you pay upfront plus the interest rate into one amount known as the Annual Percentage Rate or APR. The APR tells you the interest rate you'll be paying yearly and it is the best way of comparing loans.

The loan repayment period is another factor to consider. Even if your monthly payments for a five year loan are less than for three years, you will still pay more in the long run even if the interest rate is lower.

Ask if there are other fees which may affect the total amount of your loan, for example, late payment charges or early repayment charges.

The bottom line is that you need to look at more than just interest rates or monthly payments when comparing lending institutions. Make sure you get all the details before you sign on the dotted line.