Personal Loan

Do you need extra cash? Anyone of us can find ourselves in need of extra funds at one point or another. It might be for a necessity like buying a new car or fixing your existing car, paying for a college education, replacing household appliances, making repairs to your home, or even a family emergency. You may just want to indulge yourself or your loved ones on something memorable like taking your family on a vacation. Whatever the reason, a personal loan can make it happen. A personal loan is a better alternative than taking out a second mortgage on your home or paying the astronomical credit card interest rates.

A lending professional can help you choose a loan or line of credit that is right for you and your family. The versatility of a personal loan allows you the freedom to use the funds as you need them or see fit to do so. This type of loan is called an unsecured loan, which means it is usually not secured by fixed collateral like property, so banks may have slightly higher interest rates but offer more freedom and flexibility.

Your eligibility and the interest rate of your loan will depend on your credit history and credit score. If you have a good credit score, you could qualify for a signature or low-interest loan, but if your credit score does not meet the lender’s qualifications, you may have to apply for a subprime loan. While the rating system for credit scores is universal, the requirements change from lending institution to lending institution. There is a gray area in the credit rating system (between 600 and 650), but it depends on the lender. A lending professional can shop around and make sure you get the best rate for your credit score.

Types of personal loans available to consumers include:

• Subprime personal loans – These loans are granted to people with a low credit score, poor payment history, or insufficient credit. They typically have a higher interest rate, a percentage above the prime rate (between 0.1% and 0.6%).
• Signature loans – These low-interest, unsecured personal loans are difficult to qualify for and usually only available to those people with exceptional credit scores and unblemished credit history. They provide credit card type access to funds with added benefit of very low interest rates. A borrower can even write checks against the account.
• Unsecured line of credit – This type of loan works much like a credit card with a preset limit. Instead of getting your money in one lump sum, a borrower can draw money from the account as the funds are needed.