The need for extra cash is common, and many people will have multiple needs for funding over the course of their lives. In some cases, funding is available through their own savings or investment accounts, and some people may also draw on credit cards from time to time. However, when you need more significant cash or when these sources are not ideal, you may consider using a personal loan. With a closer look at what a personal loan is and how you can apply for a personal loan, you may be ready to move forward with your loan application.
What Is a Personal Loan?
Before you apply for a personal loan, it is important to understand what this type of loan is. It essentially is a financial product that describes a loan that is intended for personal use. It may encompass an unsecured loan, such as a personal consumer loan or a student loan. It may also encompass a secured loan, such as car loan, a boat loan or another loan secured by an asset. Generally, these are fixed term loans as opposed to revolving terms, which are common with credit cards. The loan amounts may vary dramatically from a few thousand dollars to tens of thousands of dollars.
Deciding Between a Secured and Unsecured Loan
Before you can begin shopping for a personal loan, you must first decide if you are going to apply for a secured or unsecured loan. With a secured loan, you are pledging collateral that will be linked to the loan. If you fail to make payments on the loan as agreed, the collateral can be repossessed. You can typically use an asset that you own free and clear and that has significant value, such as a boat or a car that you do not have loans on. You can also use an asset that you are purchasing with the loan. The other option to consider is an unsecured loan. This type of loan may require you to have a better credit rating, and you can expect a higher interest rate and shorter term in most cases with an unsecured personal loan.
Shopping for Great Loan Terms
After you have determined whether you want to apply for an unsecured loan or a secured loan, you can begin shopping for the right loan to apply for. Most banks and credit unions offer both types of personal loans to consumers. Furthermore, most publish their best rates and terms available online. If you have excellent credit, you can reasonably expect to qualify for the published rates. If you have bad credit, you may need to talk to each lender directly to learn more about the rates and terms that may apply to you.
After you have decided on a specific loan program you want to move forward with, you simply work with your lender to complete the loan application and to provide the required documentation. By doing so, you may quickly learn about your loan approval status and may have access to the funds you need.