Personal Loans-Secured or Unsecured
Out of all the different types of loans available today, personal loans are the easiest to
obtain, right up there with credit cards. Even if you havenít always made the best
decisions with your credit in the past, or have no credit whatsoever to this point, you can
still likely qualify for a personal loan. Basically, all you have to do is be able to prove
that you do have a job, and that your monthly pay is what you claim it is, and your
address. It doesnít take very long to get an answer, and to have money in your hand,
money that can be used how you see fit, whether it be for debt consolidation, vacation,
etc. You decide what you do with the money; just remember that you have to pay it all
back to the lender, plus interest.
When you start thinking about personal loans, you will have to decide whether you want
an unsecured or secured loan. With unsecured loans, you donít have any collateral at risk,
but you will be required to pay higher interest rates, and you may not be able to borrow
as much money as you could with a secured loan. If you have an asset in your name that
you can list for collateral, a secured loan might be the best option, as it will usually give
you a much lower interest rate, and more money available to you. If you donít have any
credit established, or have past credit problems, you may be required to take a secured
personal loan or nothing at all. This often happens to people who donít have a lot of
income, or a lot of time on their present job as well.
For someone who doesnít have any credit thus far, a secured personal loan can go a long
way towards getting your credit established. Usually your payments are pretty low, but
you may have a high interest rate. In this case, donít borrow more money than you
absolutely have to have, and pay it back as quickly as you can, which will save you some
money in interest.
Before you ever start filling out applications, know how much money you need, and what
you need it for. Donít fall for the hype, and take out a larger loan than you need just
because you can, as this could lead to potential trouble. Make certain that all of your
payments are paid in full by the required due date each month, and pay extra as often as
possible, to bring your balance down sooner. The better you handle this loan, the more
credit you will have available to you when you need it again. Whether you are looking to
build credit worthiness, or trying to rebuild from past mistakes, a secured personal loan is
a good option.
If you do take a secured personal loan, remember that your property will be seized if you
donít make your payments. Even if you have to work two jobs, make those payments on
time. Not only will you lose your property, you will ruin your credit as well, credit that
you have worked hard to establish. If something happens and you arenít able to make a
payment, talk with your lender about your options. In most cases, you might be able to
defer a payment, or refinance your loan, which can buy you some time to get back on
Unsecured loans always come with a much higher interest rate attached to them, due to
the risk the lender is taking by not having collateral. If you arenít able to make your
payments, you wonít lose any property, but the lender will pursue legal remedies to make
you pay your debt, such as wage garnishments or judgments. Even if you have an
unsecured loan, donít think that you can get by with not paying, because you wonít.
When applying for any kind of loan, make certain that you understand what you are
doing, and that you are able to pay the debt back, or you could end up in a bad situation,
no money, no credit, with nothing. Remember, that you should protect your credit, as you
never know when you will need it in the future.