Perhaps you need to make improvements to your home or pay off some high-interest credit cards. A personal loan can help you achieve your goals and get your life back on track.
But of course, like any loan, a personal loan needs to be repaid with interest. Before signing the dotted line, make sure a personal loan is in your best interest and you fully understand the terms and conditions that come with it.
A Personal Loan Is Your Loan
What separates a personal loan from any other type of loan is that you get to decide what to do with it. A car loan funds the purchase of a car, a home loan gets a mortgage and a small business loan helps grow your business.
A personal loan, though, can be used for whatever you please. You can fund a vacation, pay off debt or let it sit in a savings account in case of an emergency. The choice is yours, and that’s what makes personal loans so appealing.
Types of Personal Loans
There are two basic types of personal loans — secured and unsecured. A secured loan is backed by collateral, such as your house or other assets. Because the bank or lender can take ownership of your collateral if you default on the loan, secured loans typically qualify you for more money than an unsecured loan.
An unsecured loan, on the other hand, is not backed by any collateral. Therefore, these loans tend to be more risky to the lender.
How Much Can You Borrow?
Personal loan amounts can be anywhere from a couple thousand dollars to a hundred thousand dollars. How much you can borrow depends on your income and credit score.
Your interest rate will depend on your credit score. If your credit score is low, there’s a chance the interest rate will be higher than on a credit card.
Research all of your options in full so you know which personal loan makes the most sense for your situation. To learn more about personal loans, visit GOBankingRates and browse its library of articles.