Many people think of loans for cars and homes, but there are also times when people seek personal loans for things such as home remodeling, unexpected expenses, medical bills, and even holiday shopping or personal vacations. If you are seeking a $10,000 personal loan, there are several factors that you should consider before securing that personal loan.
Different Types of Personal Loans
It is valuable to know that there are two basic types of personal loans – secured and unsecured. In general, secured loans will offer lower interest rates, but you need to provide some type of collateral asset in order to secure the loan at the low interest rate. This might be your car, home, or other major holding that you agree to sell and use the funds to pay back the loan if you can’t make payments in full otherwise.
Unsecured loans don’t require these assets, but the interest rates you will pay are often much higher because there are no assets backing the amount borrowed. These types of loans then look to your income and your credit report to determine the likelihood that you will be able to pay back the loan on time. Both types of loans are usually arranged to be paid off within 5 years or less, similar to what you would contract for on a new car.
Where to Get a Personal Loan
Depending on which type of loan you are seeking, there are many options for you to consider when searching for a personal loan. Start by knowing your credit score (you can obtain one for free each year through annualcreditreport.com or purchase one from a major credit bureau). Once you have an accurate picture of your credit rating, you will have the foundation for negotiations and final terms.
Personal bank loan – Your local bank or credit union should be the first place you look for your personal loan. If you already have an established account with the institution, some of the initial paperwork has already been compiled, saving you time and energy. Your bank can tell you different options for both secured and unsecured personal loans. Sometimes your personal bank won’t have the best offer on interest rates or terms, so be sure to shop around for the loan program that suits your needs best.
Loan agencies – There are many loan agencies that offer personal and mortgage loans, and many of them conduct business online. If you are looking into one of these possibilities, just make sure that you read the reviews, check with the Better Business Bureau, and do your homework before signing on the dotted line.
Cashcall.com – This service offers both personal loans and mortgages, and the application process is done online and you can have your funds wired directly to your bank the same day as your application is approved. These personal loans are unsecured, meaning you don’t place anything up for collateral. This also means that your interest rate will be higher than with a secured loan, but if you don’t have any collateral to offer, this might be a good option.
Payday Loans – Be aware that many online loan agencies are considered payday loan service providers and do not offer personal loans beyond $1,000. If you find lenders who offer the $10,000 for which you are seeking, make sure you check the interest rate and the terms.
Loan specific agencies – Sometimes the best place to look for a personal loan is at a connected source. If you are seeking a personal loan to help with expenses while you are in school, check out options through SallieMae.com for student related loans. If you are a veteran, there may be special loan programs available to you as well.