Personal loans come in two varieties: secured and unsecured. Secured
personal loans are backed by some type of collateral; say an automobile,
home, gold, stocks, bonds, etc. They are usually for a longer time
periods and larger principals than unsecured personal loans.
Secured personal loans are easier to obtain because the lender has less
risk involved with the presence of collateral. Secured personal loans
are the choice for those with a bad credit history, people who desire
large loan amounts, and people who desire a longer repayment schedule.
Lenders will look primarily at your FICO credit score when determining
your eligibility for a personal loan. A higher credit score will yield
you lower interest rates on your loan. If you obtain a credit report
from your local credit reporting agency and correct any errors on it as
well as making sure that you are current on your bills, it will enhance
your eligibility and save you money.
Unsecured personal loans are normally for smaller amounts and time
periods than secured personal loans. They do not require collateral, and
are therefore more heavily based on your credit score. They are normally
for no more than $25,000 and for no more than 5 - 10 years. Some types
of unsecured loans are: signature loans, revolving lines of credit,
cash advances, and payday loans. Unsecured loans are commonly used for
debt consolidation, vacations, unexpected expenses, home repairs,
weddings and the like.
Because they require considerably less paperwork than other loan types,
unsecured loans are readily available with little more information
needed than your credit score, debt information, and proof of earnings.
Whether you opt to apply for a secured or unsecured personal loan, you
need to thoroughly explore your options, get everything in writing, and
not act hastily. Personal loans can be a great asset to help you
through your financially challenging times.
Written by Sheldon Amerson. Find more information on
href="http://www.1mortgagesuk.co.uk/secured-loans.htm">Secured loans as well as
Personal loans.
