If you are looking to borrow money over a period of less than ten years, whether you need the money for a purchase or perhaps to repay existing debt, then a personal loan may be suitable for your needs.
Unlike a home or auto loan, your personal loan is usually unsecured. This means that there is no collateral provided and the only guarantee that a borrower can give the lender is his reputation for good credit. This is also one of the main reasons why they have interest rates that are higher than most other loans.
Personal loans borrow an agreed sum of money for an agreed length of time, anywhere between five months and ten years. The lender offers you a personal loan because they make money by charging interest on it, though the interest rate can be either fixed or variable. In most cases you’ll get a decision within 24 hours.
Getting a secured loan can be tricky, but below are some steps that can make securing a personal loan easier.
If at all possible, start off with a secured personal loan. Secured personal loans will first, allow you to secure a higher amount of money on your personal loan at a lower personal loan rate. They may also give you more incentive to pay back your personalloan regularly since property may be at risk if you default on your personal secured loan.
Research Your Loan
Getting a personal loan is a lot like getting a car. You need to find out as much information from as many personal loan “dealers” as are available. The internet is a great place to begin your search for a personal loan. It’s secure and easy to use, and when things start getting frustrating you can just turn off your computer or follow another research method for your personal loan.
Get as many free quotes for your personal loan as you can. Don’t just look around where the best you can do is find teaser rates listed in bright flashy letters. Sit down online for some time, fill out some forms, and make the loan officers compete for your business. Many websites offer same-day responses on your personal loan request. Use the Internet to your benefit by applying online for your personal secured loan to see what you will qualify for.
Make a Plan
Take your quotes and use them to make a budget for your loan payments. If the plan just doesn’t look right, don’t accept it. You can always do more research. Use the loan officer as a resource – ask as many questions about your personal secured loan as possible. Ask what the rates were a month ago, ask what you would need to do to qualify for a better rate, ask anything that will help you get a better rate, a better amount, and a better payment.
When making your plan, remember that larger loans will result in a longer repayment term. It is not uncommon for the purchase of a car to established with a repayment term of 3 years while the term for home improvement loans can be for much longer terms, sometimes as long as ten years.
Making repayments under personal loans is the same as servicing any debt you may have. If you find that you have difficulty in making your repayments, seek advice from your lender at the earliest opportunity. The earlier you tell them of the difficulties the more understanding they are likely to be.
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