Personal Loan

Financial Dictionary -> Loans -> Personal Loan

Personal Loans and when to get them?

Are you being kept up all night long with countless bouts of insomnia worrying over the fact that you have too many bills, the television needs replacement, and there's a baby on the way? If this is you, a personal loan may be what you need to help you purchase what you need. Personal loans are better taken over short periods of time rather than long terms. The interest rates can be high on personal loans, but as they are taken over short periods, they usually end up cheaper than opting for another type of loan.

Credit scores aren't just for the benefit of lenders, so they can decide who rates as a credit worthy risk and who doesn't. Your credit score is one of your finest assets allowing you to tap into untold sums of ready cash to buy those things you need, or maybe even the things that you just simply want. A personal loan, is a loan that borrowers can acquire to use for just about anything under the sun including paying off debts, purchasing new equipment or furniture, or taking a well-deserved vacation to some faraway place.

Personal loans come in two styles- secured and unsecured. With an unsecured loan, typically given to those individuals with good credit, a simple promise to repay the loan (on paper) is enough to obtain it. A credit check will probably be used, especially when obtaining a personal loan from a bank. The bank will need to see bank statements, outgoings and so on. Personal loans can also be applied for over the Internet on various websites.

With a secured loan, the individual must put up collateral in order to obtain the loan. Usually, the items being purchased are offered as collateral to cover the loan's risk. For example, the purchase of a new car with a personal loan places the car as the collateral for the loan. If the borrower defaults on his loan, the lender can repossess the car in place of repayment of the loan.

Why bother waiting until you win the lottery to own the high tech electronics that you want today? Visit a few websites, the local bank, or your credit union and research what types of personal loans are available for you. Always make sure you can afford the repayments on any loans you secure as you do have to pay them back! Your credit rating will be affected if you neglect to pay it back or miss any payments. The interest rates on unsecured personal loans are usually higher than the secured loans, but this doesn't mean they are more expensive. As personal loans that are unsecured have shorter terms than the secured ones, they are much cheaper in the long run.