If you are thinking of taking up a personal loan, make sure that you are getting one for the right reasons and at an affordable rate. The first tip is to be honest with yourself and know your needs and also your financial health. Weigh out your current financial situation and go through your options again. Study your spending habits. Perhaps cutting back on some extravagance, reducing unnecessary expenditure and forced savings can help. It may take a longer time but it will save you money on interest rate repayments.
Be honest with the bank as well. Tell them why you are shopping for a personal loan. They may be able to offer you a loan or a plan that suits your financial situation better. Today, banks have a wide range of products such as car loans, commercial loans and home equity plans that may have a better interest rate than a personal loan.
There are many types of personal loan plans, and it is therefore, important to know the differences. Being equipped with information will help you make a better decision. There are two types of personal loans. The first is a secured loan where the loan is attached to a collateral such as a piece of property or asset. If your home is the collateral, you may risk losing it if you are unable to service your loan.
Another type of personal loan is the unsecured loan. The loan is not collaterised but may have a higher interest rate. Failure to service the loan will result in bad credit ratings and possible legal actions. When applying for any of these loans, the lender will definitely check your credit worthiness. If your application is rejected, it may be because of arrears, credit card debts and rejection of other loan applications.
Depending on your needs, you may consider the option of short term personal loans offered by banks and some other financial institutions. The interest rate is slightly higher because the repayment period is usually short. The sum involved is also small. Most banks do not offer more than $15,000. Another short term loan product is a fast cash advance loan. This loan is suitable if you are in need of fast cash for unexpected bills at inconvenient times such as medical bills and for car repair. Short term loans are easy to apply and approval is quick. All you need is to earn sufficient income and have good credit ratings.