The
personal loans are in competition with
mortgage loans in terms of
interest rates. Personal loans have an interest rate ranging from 6-20% depending on the amount you borrow and with a
fixed mortgage you can get a rate of 5%.
The
personal loans are in competition with
mortgage loans in terms of
interest rates. Personal loans have an interest rate ranging from 6-20% depending on the amount you borrow and with a
fixed mortgage you can get a rate of 5%.
Before you decide which type of
loan is cheaper for you should compare both options by taking your current financial status into account and the mortgage left. In any case the personal loan options available to you are discussed below.
Personal Loan Secured or Unsecured
Two options are available to a person for a personal loan. One is the
unsecured personal loan and the other is the
secured personal loan.
Unsecured Personal Loans
The unsecured personal loans are mostly taken. Almost up to 90% of the loans that arranged today are unsecured. Unsecured loans don't require any sort of security by the lender. These loans are designed for people who don't have a house for security and that's why a little difficult to get because firstly they have higher interest rates and secondly a greater risk is involved.
Unsecured personal loan are given to you on the basis of repayment capacity and your credit payment history. Amounts up to $25,000 can be borrowed and the interest rate associated with it ranges from 7 to 30%. The loan term depending on the amount of loan taken can range form 6 months to 10 years but in most cases it will be lower than the secured personal loan.
Secured Personal Loans
Secured personal loans work differently. They require a collateral or security which in most case will be your house or you car. This security makes you a low risk borrower and the terms are automatically relaxed. The
interest rates will be low and the loan term can be from 5 to 25 years on an amount of 5,000 to 25,000.
Definitely the lender is secured and is at lower risk but you are at a great risk of loosing your house, incase of defaults payments. People with
bad credit or
bankruptcy can also get their chances improved for a personal loan approval with a security.
Personal Loan Application Process
The approval of personal loans is quite easy because of their current popularity among masses. To get such a loan you will have to make a good selection first. When you have decided the loan term, loan amount and interest rate suited to your economic status then you have to fill in an application providing your information to the lender and submit the documents regarding income, job, and credit statements. The lender requests your
credit history from the three big bureaus and with the above provided information decides to lend you the money. Usually this process will take no more than 2 days.