Personal Loan Options
- What are Unsecured Personal Loans?
- Can You Get a Personal Loan if You Have Bad Credit?
- Payday Loans - Are They a Ripoff?
- Is There a Responsible Way to Use Payday Loans?
- Payday Loans - What is the True Cost?
- Alternatives to Personal Loans for People With Bad Credit
- Peer to Peer Lending - is it the Wave of the Future?
- The Myth of the Bad Credit Personal Loan
- The Pro's and Con's of Taking Out a 401k Loan
- What is an Overnight Loan and Are They Hard to Get?
A personal loan is a loan that is unsecured - which means no collateral is required to take out the loan. Secured loans are loans such as mortgages (secured by the value of your house) and auto loans (secured by the value of your car). Personal loans, because there is no collateral, differ from secured loans in terms of variety of products offered, and credit history required. Credit cards, payday loans and personal installment loans are the most common types of loans with no collateral.
When people refer to personal loans they are generally describing an unsecured installment loan issued by a bank. The term installment loan means that the loan is set for a specific repayment term such as 24, 36 or 48 months. Personal loans are generally for amounts of $15,000 or less. There are many reasons to get a personal loan, some of the most common are: to cover an unforeseen expense such as a home or auto repair, medical bills, vacation or to pay off a higher rate loan or credit card.
ThinkCash - Personal Loans
This is an unsecured installment loan with no paperwork - this is not a payday loan. You can borrow $250 - $2,500 and have your money the next business day. Apply online and get your answer in seconds...
- Rates are 25% - 75% cheaper than payday loans
- No paperwork or faxing
- Payoff in several installments or all at once - your choice
- Cash can be used for any purpose
- Approval in seconds
Approval process for personal loans
Since personal loans have no collateral they are more risky for the lender and consequently have strict credit approval guidelines. If your credit score is good (650+), you stand a good chance of getting a personal loan. If your credit score is lower than 650 you will find that trying to get an unsecured personal is difficult. For more information on this topic please see our article called The myth of the bad credit personal loan. The fact that personal loans for people with bad credit are so hard to obtain has led to the creation of an entirely new industry called payday lending. Payday lending has emerged to fill the need for people with bad credit to get emergency money quickly. These loans are very expensive and should be used only when there is no other option. A more cost effective option to get unsecured money if you have bad credit might be to get a credit card with a low credit limit. Some credit card lenders have more relaxed underwriting guidelines and may be able to approve you in return for a higher than average interest rate. Even at a higher APR, a credit card will almost always be significantly less expensive than a payday loan.
The fact that personal loans are so hard to obtain for people with bad credit has given birth to yet another industry over the last few years. Peer to Peer lending, also called social lending, has come into existence as a way to help people of all credit types get unsecured loans. Peer to peer lending websites match people looking for money with people who have money to lend. Your credit history is shared with the individual lending the money and you will pay a higher interest rate if you have bad credit. There are plenty of individuals willing to lend money on a high risk personal loan because of the very high return that they will earn on the money they lend. Social lending is rising in popularity and will hopefully continue to make it easier to get a personal loan even if you have bad credit. Peer to Peer / social lending is also a great option for people who have very good credit. Many individuals who lend money on social lending sites are conservatively risk-minded - meaning that they will only lend to people with very good credit scores. Since a loan to a person with a high credit score is not very risky it will have a very low interest rate associated with it.
There are, as we've just seen, several types of personal / unsecured loans available. Your credit history will ultimately be the key deciding factor which determines the type of loan for which you will qualify.
A sensible and practical first step in your search for a loan product that effectively meets your needs is to get a free copy of your credit report. Knowing exactly what is on your credit report has several tangible benefits. By having a thorough understanding of your personal credit history, you stand a much better chance of choosing the best path for trying to obtain your loan. Equally important, you will discover if steps are needed to start improving or repairing your credit.