There are many types of personal loans, so it is highly likely that whatever your need or situation, you can find a loan to suit.
Florida (OPENPRESS) March 22, 2012 - There are many types of personal loans, so it is highly likely that whatever your need or situation, you can find a loan to suit. Bear in mind, however, that interest rates and terms can vary greatly, so it is important to review each type carefully.
By definition, a personal loan is a loan that can be used for any purpose, and it may be secured or unsecured. A secured loan requires collateral, which may be in the form of cash flow or an asset. A second mortgage can be used as well.
Many personal loans are set up as installment loans in which the borrower receives a sum of money up front, and then he makes monthly payments with interest until the total is repaid.
An unsecured loan requires no collateral, and the lender will therefore have no claim on the borrower's assets or cash flow should the borrower default on the loan. This type of personal loan is based solely on the creditworthiness of the borrower - so for this type of loan, it is clear that having a good credit history is a must.
Another type of personal loan is a line of credit, which may or may not be secured. This type of personal loan gives the borrower a certain amount of flexibility, by allowing him to borrow against the balance and repay it monthly, without retiring the entire debt.
An interest rates type of personal loan can be paid of with the cash flow of the investor, but this is a premium type of personal loan. This loan usually affords the lowest interest rate possible, but it also requires collateral.
Credit cards are another type of personal loan, and one that most people are quite familiar with. As unsecured debt, credit cards are basically personal loans that require monthly payments that include principal and interest.
When considering applying for a personal loan, make sure you thoroughly examine the terms. In most cases, you'll find the shorter the term of the loan, the higher the interest rate. Banks usually offer the best interest rates and terms, but require good credit. For those with less than perfect credit, an alternative type of lender is usually sought.
If you are considering a personal loan, it is wise to first take a good, long look at your own financial situation. Consider whether you will actually be able to repay the loan you are after. You should also consider the fact that you may be asked to put up collateral, which means you'll be risking your home or some other asset.
Weigh your options and the risk carefully - and if you can safely handle it, a personal loan may be the best option to meet your financial need.
