6 Types of Personal Loans You Need to Know About

A personal loan is any loan granted to you for purposes that are not defined, unlike an auto loan to buy a car, student loan to pay for college, or mortgage to purchase a house. A personal loan recipient uses the funds for general purposes. If you are considering applying for a personal loan, count on Huntsville Banking Rates to do the shopping for you and compile the lowest personal loan interest rates from a variety of sources. Here are examples of some popular and lesser-known personal loan types:

Secured Loan: A secured loan means you offer up collateral in order to borrow from a lender. If you default on your payment, you run the risk of losing the property you have secured your loan with. If you want to lower the rate of your personal loan and are certain you can make your payments on time, a secured loan may be best for you.

Unsecured Loan: If you are not comfortable risking your property to obtain a loan, you may want to consider an unsecured loan. An unsecured loan places more risk in the lender’s hands, thus the loan rate tends to be higher. This type of loan is great if you want to pay a bit more over time in order to adopt less risk on your behalf.

Payday Loan: These loans are intended to cover a gap in funds between pay periods, and are generally very short-term and paid back immediately. They can be used to pay for everything from groceries to the mortgage. If you only need a small amount of money to make ends meet for the week, consider a Payday loan.

Military Payday Loan: Like a payday loan, these are loans offered by the U.S. military to assist qualified members of the armed forces access cash they need. Special terms of these loans include a low interest rate even if the applicant has bad credit and a repayment schedule chosen by the borrower.

Line of Credit: Like a credit card, an issuing financial institution determines the terms of your loan based on your needs, collateral available, and credit score. Payments are scheduled according to deadlines and if you pay down your loan in a timely manner, you may qualify for a higher credit limit in the future.

No Credit Personal Loan: These loans are designed for borrowers who have not yet established a credit history. No credit check is required, though the loan interest rates may be higher than most.

Huntsville Personal Loan Rates

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Best Personal Loan Rates in Huntsville

If you have good credit, you will be able to qualify for a low personal loan rate. Short term loans tend to have higher rates, as do payday loans or cash advances. For the best personal loan rates in Huntsville, consider getting a loan secured with a vehicle or property.

Most personal loans are granted as unsecured loans. Borrowers do not necessarily need to have the best credit or even any type of collateral as that is not the primary concern for the providers of these types of loans. Unsecured loans are provided more on good faith and what lenders need to provide are their name, social security and income verification. No collateral is needed so if the loan goes into default, the lender will not get anything in return. Higher rates are the price to pay for not having collateral or a co-signer on these types of loans.

Using Personal Loans to Consolidate Debt in Huntsville, AL

Personal loans are also excellent tools for debt consolidation. As opposed to having multiple debts on a variety of credit or store charge cards with a variety of APR rates and payment deadlines, a personal loan can make the process easier to manage. By taking out a personal loan, all the debt can be paid off and that one debt can be easily managed. Many times, a personal loan rate can be lower than a credit card interest rate, making the personal loan interest rate an advantage.

If someone chooses a secured personal loan to consolidate their debt, they also may be able to take advantage of a longer repayment schedule with more flexible terms and conditions than their existing debt holder.