One of the easiest types of personal loans to receive from a bank or credit union is an unsecured personal loan. Requiring no collateral, these types of personal loans are available to people with good credit or those who are able to have a co-signer with an outstanding credit history.
While most people borrow on a short-term basis, many financial institutions allow for repayment terms ranging from 12 to 48 months. Borrowed amounts can vary based on a person’s credit history, the loan’s repayment length, expected monthly payments and institutional lending policies. Amounts can differ from one lender to another but typical personal loan amounts usually range from $500 to $10,000.
Sometimes perceived as an easy way to purchase a vehicle, while being able to keep the vehicle’s title, personal loans should only be used to fund purchases where no other means of bank financing are available. If needing the money for a car, boat, residential down payment or other type of big-ticket purchase, applying for a traditional vehicle loan or mortgage is a better option, as personal loans tend to carry a higher interest rate than other types of loans. However, if needing the money for an emergency home or vehicle repair, a personal loan is an excellent resource available to people with a good credit history and a low debt-to-income ratio.
To apply for an unsecured loan, prospective borrowers will need to submit proof of income, state monthly expenses and undergo a credit check. Applications can usually be initiated online and once approved, can usually be completed in one physical visit. While not offered by all lenders, if having a personal savings or checking account at the financial institution borrowing from, you may inquire to see if having a monthly automated withdrawal will deduct a quarter of a point interest rate from your loan. This repayment enticement is offered by some banks to ensure payments are received in a timely manner.
Before signing the loan’s contract, be sure to read all repayment terms carefully. If there is something you do not agree with, do not sign the contract. Try a different lender or attempt another means of acquiring money. Your credit is important; never borrow more than you are comfortable repaying, including added interest. Once paid in full, your personal loan borrowing experience can help raise your credit history and make you appear more credit-worthy to future lenders.
In Denmark where I live, we call personal loans forbrugslån.
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