If you want to consolidate debt, pay for unexpected expenses, or finance a renovation, a personal loan may be an option. This kind of loan is an installment loan, meaning that you borrow a specific amount of money and pay off the loan in, usually monthly, installments. While personal loans can be a handy financial tool, you still want to spend some time researching before taking out this kind of loan. Here are three things that you should know about personal loans.
Unsecured And Secured Personal Loans Are Available
Before you look into personal loans, it's important to note that they are available in unsecured and secured options. The difference between a secured loan and an unsecured loan is collateral. With a secured personal loan, you need to put up something of value, like your car or a savings account, as collateral. If you default on your loan, your lender will seize your collateral. With an unsecured loan, no collateral is required. If you are looking to take out a larger personal loan or want more favorable rates, a secured loan may be the right option.
Many Places Offer Personal Loans
When it comes to loans, many head straight to the bank to apply. However, personal loans are available through various lenders. Banks and credit unions are a great place to start if you are seeking a personal loan. Another option is to use an online lender. Taking the time to comparison shop and get numerous quotes will help you find the best deal on your loan. Taking the time to look at your options can help you save a significant amount of money on a personal loan.
The Fees and Interest Rate
Before you decide on a personal loan, it's essential to know that there's more to it than finding the lowest interest rate. While interest rates range from six to 36 percent with personal loans, there are other fees. Loan origination fees make up a portion of your loan and can make one option more expensive despite a favorable interest rate. Many personal loans also have prepayment penalties. Before you take out a personal loan, read the fine print and make sure you know exactly how much your loan will set you back.
If you are thinking about a personal loan, there are a few things that you need to know. While many personal loans are unsecured, you can obtain a secured personal loan. You'll want to look into which option will work best for you before you start your search. Many places also offer personal loans ranging from banks to online lenders. There's even more to personal loans than just the interest. Make sure you do the math and account for other fees that may apply. You can contact companies such as Ardmore Finance to learn more about what to expect from personal loans.