Personal Loans

When you mention the word "loan," most people think of a home mortgage. They are, without a doubt, the loan of choice for most Americans, thanks to their tax advantages and relatively low rates.

However, if you need quick access to cash and aren't a homeowner, or don't want to touch the equity in your home, an unsecured, or personal, loan is a viable option. If you have good credit and need a moderate amount of money, a personal loan can be a very attractive alternative to a credit card or asking friends or family to help you out.

Good Credit, Better Personal Loan Rates

The financial world tends to smile upon people who have good credit. Unsecured loans are no different. Because a lending institution doesn't have the luxury of using your property as collateral for an unsecured loan, they must use your credit score as the criteria for their lending decisions. Thus, the better your credit, the better your interest rate and monthly payment will be. They'll also look at your income and debt, to make sure you aren't overextending yourself.

Smaller Personal Loans are Better

If you need to borrow a small amount of money, a personal loan may be a better choice than a credit card. If your credit is in good shape, you may be able to get a personal loan that beats the high rates charged by credit card companies. You may also find that borrowing from a bank or credit union can be less stressful than asking friends or relatives.

If you're shopping for a personal loan, look around for the best interest rates. Obtain a copy of your credit report and review it for accuracy. If there are any errors, immediately begin the process of correcting them.

An unsecured loan might not have all the tax benefits of a mortgage, but it could be the answer to your financial woes at a rate and repayment schedule that fits comfortably into your financial picture.