Personal loans are ideal for people who need to borrow cash for expenses and wish to have extended repayment terms. Available in amounts ranging from a few hundred dollars to upwards of ten thousand dollars, the loan amount individuals can qualify for is based on the person’s past credit history, current income and established work history, loan repayment period and established lender guidelines. Unfortunately, some people who apply for a personal loan may get rejected, as the standards to qualify for this type of loan are more stringent than one for a vehicle or watercraft.
If rejected for an unsecured loan, it may be wise to find a co-signer (co-borrower) who has excellent credit history and an income that will be sufficient to make monthly installment payments. Additionally, this person should have a low debt-to-income ratio and be willing to assume responsibility for the loan; should there be a disagreement between the two of you.
Should you not be able to locate a co-borrower or one that meets the stringent credit and income guidelines needed to satisfactorily repay your loan, borrowers may wish to attempt a secured loan. What this means is a borrower is granted the loan amount but must sign over collateral that can become the bank’s property; should the loan come into default. Since the risk of issuing secured loans is greater than one with collateral, borrowers may wish to attempt gaining cash using other lending methods.
Prospective borrowers needing a personal loan to cover a home repair may wish to look into a home equity loan from their bank or credit union. Sometimes carrying a lower interest rate than a secured personal loan, these loans will extend a mortgage; however, borrowers needing an asset in order to be granted a loan may pursue this option.
While not a home repair, people needing personal loans to cover vehicle repairs may wish to attempt to refinance their vehicles. This process will not provide instant money; however, it can significantly reduce a person’s car payment; freeing-up extra cash to use for repairs. If having money in a savings account and not wishing to withdraw it, opening a secured credit card is a form of a personal loan many banks grant to those with less than perfect credit. Money in the amount of the credit card is frozen and after two years of timely monthly payments, money can be returned to the person’s bank account in an available status and the credit card can become unsecured.
In Danish, my native tongue, personal loans are called forbrugslån.