Commonly personal loans are of two types - unsecured personal loans and secured personal loans. In case of secured loans, the borrower gets the loan amount sanctioned after he furnishes collateral of value. With unsecured loans, there is no such need of guarantee. Secured personal loans are ideal for big-financial requirements or for purchasing house, cards or loans amounting more than $10000. The major benefit of secured loans is the lower interest rates, because of the collateral. In case, if any unavoidable default happens, the lender can recoup the loan amount by selling off the collateral or guarantee. In case of unsecured loans the interest rates are automatically hiked up because there is no collateral and if the borrower defaults on the repayments, the lender finds it difficult to get back the amount. Unsecured loans range between $1500 to $20000. The repayment period can stretch up to 5 years. Some borrowers are willing to extend the pay back period up to 10 years. In such case  borrowers may have to pay a more interest on the loan amount due to longer debt duration. This makes the loan a very costly proposition.

Many financial institution and building societies offers personal loans. Then there are private and online lenders. To get the best loan deal, one must do necessary research and seek all the information. You should also take care of all the terms and conditions of various financial lenders. Though there is no dearth of lenders and financial institutions, there is lots of difference in the way they process the request and the issues related to it. Clarify yourself about loans with hidden charges and extra fees. Do a thorough comparison analysis and confirm yourself that you are getting the best deal before arriving at any decision.  

While allotting the loan the basic criterion for judging an applicants loan request is his credit profile. If the credit score of an individual is more than 700, he is deemed as a safe client who has the capability of repaying back the loan. Always keep in mind that if you miss a payment or are late with payments then it have negative effect on your credit score.


Recommended Books :---

The Wall Street Journal Guide to Understanding Personal Finance, Fourth Edition by Kenneth M. Morris and Virginia B. Morris (Paperback - Aug 31, 2004)

Personal Finance For Canadians For Dummies (For Dummies (Business & Personal Finance)) by Eric, MBA Tyson and Tony Martin (Paperback - Mar 23, 2007)

Free Yourself from Student Loan Debt: Get Out from Under Once and for All by Brian OConnell (Paperback - May 1, 2004)

The Motley Fool Personal Finance Workbook : A Foolproof Guide to Organizing Your Cash and Building Wealth by David Gardner, Tom Gardner, Inc Motley Fool, and Dayana Yochim (Paperback - Dec 24, 2002)

Live Debt Free: How to Quickly Pay Off Your Credit Cards, Personal Loans, and Mortgages, and Build Real Wealth Today! by Ted Carroll (Paperback - Dec 2003)

50 Simple Steps You Can Take To Improve Your Personal Finances: How to Spend Less, Save More, and Make the Most of What You Have by Ilyce R. Glink (Paperback - May 22, 2001) 

Jump Start Your Mortgage Career: A Proven Plan For Loan Officers And Mortgage Brokers Who Want To Skyrocket Their Income in 30 Days by Ameen Kamadia (Paperback - Oct 1, 2006)