Florida (OPENPRESS) July 18, 2011 - A personal loan is something that isn't right for everyone. It can be a bad choice for those who are struggling with the deb they've already accumulated while it can be the best option for borrowing money for others.
A personal loan is different from a mortgage or home equity loan because it its unsecured - no collateral was used for the loan. This means the lender has a greater risk. For this reason, the interest rates for personal loans are higher than secured loans, such as a mortgage or home equity loan. But the rate is still often lower than credit cards.
Personal unsecured loans are often due at the end of a set term, which usually indicates that the rate is fixed. A personal loan can also function as a revolving line of credit like a credit card, in which case the rate would be variable.
Are you a good candidate for a personal loan? It depends on your circumstances. If you are a renter, very often a personal loan may be the only option for you. If your home equity is tapped out, a personal loan could be a good choice. If the borrower needs to borrow only a small amount, and can pay the loan back in a short period of time, a personal loan could be just the ticket.
If you are considering any type of loan, weigh your options carefully. If you are unsuccessful at obtaining a secured loan, a personal loan is likely a better choice for you than a credit card.
But remember: various lenders offer different fees for personal
loans, so be sure to do your homework and shop around. You can compare loans, rates and payment options online, or by calling the lenders you're interested in.
And don't forget: pay back the loan as soon as you can and according to the terms. You don't want to have to roll the loan over, in which case you'll pay fees and even more interest.