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There
are two kinds
of personal loans, secured and unsecured. Secured loans are backed by
some form of collateral such as an automobile, a home or property. They
are usually for longer periods of time and for larger amounts than
unsecured loans. Secured loans are easier to qualify for because the
lender takes on less risk with the presence of collateral. Because of
the lowered risk they generally have lower interest rates. Secured
loans are best for borrowing large amounts, people with bad or
imperfect credit history and those that want longer repayment periods.
A
higher credit score will give you a
lower interest rate.
Obtain a copy of your credit report from any of the major reporting
agencies. Be sure you get a copy with your FICO score. Correct any
errors and make sure all your bills are current, this will save you
money. Lenders will use your FICO to determine your eligibility and
your interest rate.
Unsecured
loans do not require collateral; they are normally for less than
secured loans. The upper borrowing limit is usually about $25,000 with
a repayment term of 5-10 years. Some kinds of unsecured loans are cash
advances, payday loans and revolving lines of credit. Unsecured loans
can be used for debt consolidation, unexpected expenses, vacations,
home repairs, student loans, wedding loans etc. They are ideal for
people who do no own a home or property or homeowner who does not wish
to pledge their home or property.
Requiring
less paperwork than other loans, you can usually apply for an unsecured
loan online with as little as your credit score and history, debt
information and your earning history. One of the main benefits of an
unsecured loan is flexibility; they can be utilized for many different
kinds of purchases. The money can be available to you in as little as 24 hours.
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