If you are going to buy a new home, chances are you are going to need a home loan from a lender. However, personal loans can be used for a variety of different things, including real estate.
Personal loans are generally not too hard to obtain for most individuals. Even those individuals with poor credit or who haven’t established a credit rating can generally get one.
You will need to verify income, employment, and residence when you apply. Personal loans are a fast and convenient way to get the money you need for a variety of needs-the funds can be used for essentials, travel, education, real estate, or to pay other loans.
There are generally two types of individualized loans, secured and unsecured. It can be hard to decide which one is best for you.
Secured loans come with a lower interest rate than unsecured loans. However, to get that lower interest rate, you will have to offer some type of quality to the lender in the event you are not able to repay your loan.
In many cases, the one you will choose will depend on what you are eligible for. Unsecured loans are generally acquirable to those who have a good or outstanding credit rating and a steady income.
Secured loans are usually the only option for those with poor credit, no credit history, and an unsteady work history. Establishing good credit can easily be done through a secured personal loan.
They payments are often low, but your interest may be off the charts. To offset, this use it to your advantage.
Don’t forget the timeless rule to only borrow what you need. Know before you apply what amount you are looking for as well as what you plan to use it for.
If you stick to it, you won’t get into financial trouble that you can’t get out of down the line. Don’t let a high pressure lender talk you into taking more than you really need.
If this personal loan is your opportunity to establish your credit history, then don’t blow it. Use it wisely and always make all your monthly payments on time.
If possible pay the loan off sooner to show you are responsible. Doing so will make the process much easier the next time you need to apply for a loan.
One late payment can affect your credit rating for a long time. Secured loans can also be a second chance for those with poor credit to redeem themselves.
It is important that you don’t miss any payments with a secured loan. If you find you can’t make a payment for some reason, contact the lender immediately to work out a solution.
This is very important if you have lost your source of income. Most lenders will try to resolve the issue before reporting the personal loan as being in default.
Since you have secured the loan with some type of property you own, you are at risk of losing that item if you can’t repay the loan. It is in your best interest to find a solution to stay on track with the payments of a secured personal loan.
Unsecured personal loans have a higher interest rate, but you will have the peace of mind that nothing you own is tied to that loan if you default on it. However, it is still very important for you to take responsibility for the debt and pay it as outlined in your loan terms.
The same rules apply here as with a secured loan. Only borrow what you need, and pay it back early if possible to keep your credit score high and reduce the amount of interest you will pay on the loan.
Personal loans are a great resource for those who need money fast for a variety of reasons. It is important to consider the obligations of both secured and unsecured personal loans before committing to one.
Most lenders are glad to take the time to explain which one will work best for your needs and why. Make sure to ask questions if you don’t fully understand the process for a personal loan.
Do your best to make your payments on time or ahead of schedule. Your credit is a serious matter than you should always work hard to maintain.
Jack R. Landry has worked in real estate since 1988 as an expert on home buying and construction. He has written hundreds of articles on real estate and home construction including Utah home builder.
Jack R. Landry