Tag Archive | "Personal Loans"

Unsecured personal loans – the safest way

When looking to take out a loan from moneylender, there are many different options available in today’s credit marketplace. Two types of loans, secured and unsecured, offer different advantages to borrowers looking for access to cash. Finding out the best option that works for each individual circumstance takes a little research, but is ultimately up to the borrower.

Secured Loan

The first type of loan, a secured loan, is something offers collateral should a borrower not be able to repay a loan. Commonly, creditors will look for collateral in the form of an automobile or other high value item. Should a borrow not be able to pay a loan back, or “default,” the creditor or lending institution is then able to take that collateral in order to recoup their losses. Often, the value of the collateral is determined by the creditor or a third party, it is not taken on the word of the borrower.

Unsecured Loan

The second type of loan, an unsecured loan, is one that is tied to a contract and a borrowers personal credit history. These loans outline specific repayment terms and any fees associated with them at the outset of the loan. As with any form of credit, the better a borrower’s credit score, the more favorable the terms of the interest rate should be. However, some lenders use a flat interest rate when offering unsecured loans regardless of a borrowers credit-worthiness. It is important to note that all individuals may be eligible based on their creditworthiness. It is important to research a credit score and what the minimum requirements of the loan are prior to borrowing.

Secured loans typically offer slightly lower interest rates as creditors have the ability to recoup their losses in the case of a default. Should a borrower not have any collateral unsecured personal loans are typically the safest way to go. As with any major financial decision, it is very important to do research prior to making any decisions.

Unsecured personal loans – the safest way

Posted in LoansComments Off on Unsecured personal loans – the safest way

Personal Loans Vs. Short Term Loans: What’s the Difference and What’s Best?

Personal Loans Vs. Short Term Loans

Personal Loans Vs. Short Term Loans

Personal loans and short-term loans are broad categories that sometimes overlap but nonetheless retain their own unique characteristics. As a result, each kind of loan is often better suited to the borrower than its counterpart under specific circumstances. However, it must be stressed that both terms label entire loan categories, meaning that individual exceptions to the general rules can and do exist.

About Personal Loans

Personal loans are defined as being loans that are used for personal purposes rather than commercial use. Furthermore, this is contrasted against financial products such as car loans that are taken out for personal purposes but restricted to specific uses as detailed in their loan agreements. Few universal statements can be made about personal loans due to their diversity, but here are some general rules about such financial products.

* Personal loans come in all sizes and shapes. Borrowers can take out big and small sums, borrow for either the short or the long term, put up collateral to secure the loans or not, and so on and so forth. No matter the borrower’s needs, there is a personal loan available out there to fulfill them.

* However, the same is not true of the borrower’s circumstances. Although there are personal loans designed to cater to borrowers who have either bad or no credit rating, most personal loans tend to be restricted to individuals with good or at least respectable credit ratings. Individuals with bad or no credit ratings have a much harder time securing personal loans and must accept punishing conditions.

About Short-term Loans

Short-term loans can be used in colloquial reference to a number of financial products, but in general, the term describes personal loans possessing terms stretching one year or less. Once again, short-term loans come in a range of sizes and shapes, but tend to be much more restricted compared to personal loans. A great number of these financial products are designed for use covering financial emergencies.

* Short-term loans tend to offer smaller sums compared to personal loans. Although it is possible to secure sums higher than $1,000, the borrowing requirements tend to be quite high.

* Short-term loans are often easier, faster and more convenient to procure than personal loans. One reason is because short-term loans and their smaller sums pose less risk for their lenders. However, there is also the fact that there are numerous short-term loans designed to streamline the borrowing process and appeal to individuals with bad or no credit ratings. One prominent example being payday loans.

* In general, a shorter term means that the interest rates are lower compared to loans with longer terms. This is because no one can predict the future, meaning that lenders consider longer terms riskier and demand higher interest rates to cover their profits. Remember that this does not mean that short-term loans charge less interest than personal loans because there are other factors such as size, risk, and structure used in the calculation.

Personal Loans Vs. Short-term Loans

Once again, personal loans and short-term loans are better suited to borrowers under specific circumstances. Someone with a poor credit rating but still needs funds fast to cover short-term problems with his or her finances should go for a short-term loan. In contrast, someone who is interested in a more customized financial product with better conditions and lower interest rates should go for the personal loan provided that his or her credit rating is good.

Written by Peter Coppola, a personal finance and insurance researcher. He enjoys writing for various personal finance blogs. Click here to find out about mortgages.

Personal Loans Vs. Short Term Loans: What’s the Difference and What’s Best?

Posted in LoansComments Off on Personal Loans Vs. Short Term Loans: What’s the Difference and What’s Best?

  • Your Access to Free Credit Reports: The Fair Credit Reporting Act (FCRA) requires each...
  • Credit Repair: How to Help Yourself: The Federal Trade Commission (FTC) says do yoursel...
  • Debt Management: Personal bankruptcy generally is considered the de...
  • Annual Free Credit Report: The federal Fair Credit Reporting Act (FCRA) requi...
  • Money, tax and benefits: National Insurance number cards are being replaced...

free counters
Free counters