Personal loans: A viable option to satiate your financial needs

by Henryneal - Date: 2007-02-15 - Word Count: 378 Share This!

A personal loan from a private lender is always a better loan option as compared to any other finance option available in the market. Though you can take a loan from the high-street banks and building societies, due to the stiff competition among the private lenders, you may avail a good loan deal.

If you consider options like credit cards, you have to bear higher interest rates, which results in higher monthly outflow. In the same fashion, an overdraft also entails a higher rate, which becomes expensive for most of us.

Personal loans are a generic term for loans, and it can be broadly categorised into a secured and an unsecured loan option. The APRs (Annual Percentage Rates) varies from lender to lender. Your credit record also decides the interest rates. A person who has a severe credit record will have to pay higher interest rates.

You can use personal loans the way you want. You can use it for buying a car, consolidating your multiple debts, paying your tax bills, for doing your home improvements, going for a holiday trip, wedding purposes, pursuing higher studies and many other things, which you feel you would not be able to meet on your own.

A secured loan option necessitates the presence of collateral, like your home or any other asset. The presence of collateral to the lenders reduces the risk. Hence, a lender usually offers a lower rate of interest. Apart from this, a longer repayment term makes the monthly outflow lower.

Those who don't wish to put their property as collateral can procure the unsecured loan option. The advantage with this loan type is that the loans can be availed faster. This loan type involves less paper work, which ultimately helps in reducing the hassles in availing loans.

People who have problems with their credit history may avail this loan option, if they fulfil the desired loan criteria of the lenders. Arrears, bankruptcies, defaults etc. are considered as problems for a credit record. The credit history can also be improved with this loan type.

Before opting for a loan option you need to judge the best possible way, where you can save a significant amount of money. After all, it's a matter of your hard earned money.

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