personal loansLoans come in many forms, with many terms, in many denominations. Mortgage loans, auto loans, business loans and student loans are all ways for people to borrow money responsibly while keeping their credit revolving, and their credit score current.

The personal loan is another lending option that’s popular with consumers. Unlike other types of loans, personal loans (also called consumer loans) can be used to pay a number of expenses, like bills, household or car repairs, vacations or tuition, medical fees, or even taxes.

Not all personal loans are made equal. Before borrowing money, keep in mind that  based on your credit history and income, loan amounts can vary from approximately $1,000 to $150,000. Your own financial status plays a big role in the type of personal loan you may be able to obtain.

Unsecured Personal Loans

Unsecured personal loans are sometimes called signature loans because they involve a borrower “signing off” on their promise to pay back the loan to their lender without any collateral. To ensure the loan is repaid, interest rates on unsecured borrowing are usually higher than their secured counterparts. But don’t let high rates deter you from pursuing an unsecured loan — most loans of this type are fixed and “closed-end,” designed for shorter terms of one to five years.

Like with any loan, always examine the terms of a signature loan before signing. There may be what are called exit fees for paying off your loan early.

Personal Loans for Bad Credit

Sometimes, financial circumstances can negatively affect credit. Even the most financially responsible person can have poor credit, and that can become a major obstacle in how lenders and creditors do business with consumers, meaning inflated interest rates, or declined loans and lines of credit. If you’re in the process of rebuilding your credit, there are personal loans for bad credit that you can be approved for.

Secured, High-Interest Loans

Secured loans are most usually offered by pawnbrokers who lend money in exchange for some form of personal property as collateral. When the borrower repays their loan, they receive their asset back. If you’re rebuilding your credit, such loans in small amounts can go a long way, in time, to improving your FICO score.

Co-Signing

personal loans for bad creditFriends or family members may be willing to help you obtain a loan by co-signing their name to the loan agreement. Having a co-signer with excellent credit can result in not only being approved for a loan, but receiving a low interest personal loan, as well. Approach co-signed loans with caution, however; if you default on the loan, both you and your co-signer’s credit are affected. But by making timely loan payments, both of your credit histories will experience benefits.

Partner with a Credit Union

Credit unions are financial not-for-profits that place priority on their members’ financial well-being, since the money you invest in a credit union share account is returned in the form of higher interest rates on savings and deposit products. But not on loans!

Your credit union may be more flexible in offering you a personal loan if you suffer from poor credit. If you’re approved, by rebuilding your credit, you remain in their good standing, and are eligible for other loans with more attractive terms.

Personal Loans Online, and More

Finding personal loans online is as easy as referring to Go Banking Rates for a list of local banks or credit unions. But, with the proliferation of online lending through websites like Amazon.com, obtaining a personal loan is becoming more simplified and varied than ever before. As well, like shopping for a secure loan, pawn shops and brokers are now increasing their online visibility in offering loans to consumers.

Personal loans are a viable option for people with good or bad credit. Like any other loan, it will benefit you best to look at the loan terms, seek a low interest rate, and agree on a manageable payment schedule. These practical loans can vary in price, but they can also vary in what you use them for. A good form of “debt,” in every sense of the word, the personal loan can go a long way to making positive, personal differences in how you control your own credit history, and what kinds of bigger and better loans you can pursue in the future.

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Learn More About Personal Loans

A personal loan is money a person borrows from a bank or other financial institution in an effort to meet financial needs, both short term and long term. The two most common categories of personal loans include secured and unsecured loans. Secured loans require some type of collateral – this might include your home, which you could lose if you default on repayments. Unsecured loans don’t require collateral; however, borrowers are charged a higher interest rate for the risk imposed on the lender.

The term of a personal loan can be just about as short or long as the borrower prefers. There are also no set terms on the amount that can be borrowed – it depends on the type of loan you take out as well as your level of credit. Repayment terms are also flexible and are usually determined by the financial institution you’re working with.

Credit checks typically come standard with personal loans. For this reason, personal loans can be declined if the lender feels the borrower runs a risk of defaulting on the loan.