Repair Your Credit | A Loan That’s Best For You (Pt. 1)

Choose the loan that meets your needs

You’re on the road to “Repair Your Credit.” If you missed the first installment, CLICK HERE.

No matter the financial need, you’re likely to find the right type of loan to meet your needs. It doesn’t matter whether you need to finance an automobile purchase, home or schooling; you can find a loan. However, the need for smaller amounts of money necessitate a different approach. Why not try a personal loan? This type of loan is unique to your needs. Circumstances where a personal loan might come in handy could include car repairs, a temporary leave from work due to a deceased family member, or anything else where emergency funds are necessary.

Personal loans typically do not require the applicant to disclose their reasons for seeking the loan. For some, this may be private information that they would prefer not to disclose, making the personal loan option particularly attractive.

Before signing on the dotted line, however, consider that there are multiple kinds of personal loans. “Repair Your Credit” hopes the following information will guide you in discerning the differences and advantages of the options on the table. Let’s take a look at some of the most common, easy-access options for personal loans: secured personal loans, unsecured personal loans, short- term personal loans and personal payday loans.

Secured Personal Loans

Secured personal loans are issued by a lender who has been able to secure the value of the loan through the collateral. What’s collateral?  It’s assets the borrower offers to the lender. If the borrower were to default on their loan, the lender can put a lien against the borrower’s assets. Such loans are fairly easy to come by if your credit score is decent and you have collateral to offer. Keep in mind that only assets a borrower owns can be used as collateral. For example, if you still owe money on your car – you don’t own it outright – it technically still belongs to the lender. On the other hand, a home’s equity can be used as collateral in some circumstances. For most people, this is the largest available asset at their disposal.

Defaulting is a situation you most definitely want to avoid when it comes to your loan. If you need your house or home and offer them as collateral on a loan, don’t miss payments. You must consider the amount you wish to borrow and the monthly payments you’ll be expected to make.

Unsecured Personal Loans

Don’t want to have to put up collateral? An unsecured personal loan was be what you need. Lenders who offer these types of loans may not be asking you to put up personal assets, but the trade-off is that unsecured personal loans almost always carry a higher interest rate. It makes sense, from the lender’s perspective. They’re taking a bigger risk if they don’t have collateral to (potentially) cover their losses. Generally, these types of loans are more difficult to obtain.

To qualify for an unsecured personal loan, your personal credit history will be pulled by the lender so that they can make a determination as to your credit picture. They want to know how likely you are to pay the loan back, and your credit history gives them at least a partial picture. It’s an imperfect picture, but American government and financial institutions have rarely been mistaken for being creative.

Next, let’s take a look at SHORT-TERM LOANS…