There are times in life when you want or need to spend more cash than you have on hand. You can borrow the money and pay it back a little at a time if you have reasonably good credit. Depending on what you plan to do with the money there different types of personal loans available.
When a loan makes sense
You can take out a personal loan to pay for a big project, consolidate debt or finance a vacation. If you need a lump sum of money that you don’t plan to pay back within about a year, a personal loan could be the best answer. If you need funding relatively quickly, this could also be the right move. If your credit card interest rates are in the upper teens or higher, paying them off with a personal loan may work to your advantage. If you don’t have the time to save up money to meet your goals, borrowing might be the next logical step.
Types of personal loans
Most personal loans are unsecured. That means you’re borrowing the money based on your creditworthiness alone, without putting up collateral such as a car or house. Unsecured loans present a higher risk for the lender, since it’s essentially relying on your financial reputation to guarantee repayment. So this option carries a higher interest rate than one secured by an auto or a home. If you don’t repay a loan backed by such an asset on time and according to the terms, the lender can take your collateral or foreclose on your property.
How to get a loan
The first thing before you apply for a loan would be to see what’s affordable and what’s realistic. When you check available rates online or other places like a credit card, make sure to factor in fees or application fees. Many times it can be easier to qualify for a loan if you have history or a checking account with a lender–even if your credit isn’t great.
Before borrowing, it’s best to have a plan for how the money will be used and how you’ll pay it back. Taking out a personal loan can help consolidate debt, accomplish goals or even make a dream become a reality.
If you have plans for future projects or debt consolidation, you can always speak to our loan representatives to learn more about the different personal loans we offer at Liberty Savings.
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