You get a personal loan in order to go on a vacation, pay medical bills, or buy something for the house (such as a new appliance). It is not supposed to be used to start a business or help get your business out of a financial bind.

There are two kinds of personal loans: secured and unsecured. A secured loan simply means you are putting up some sort of collateral (that’s something you own) to get the loan. An unsecured loan means you are getting the loan without having to put up any collateral.

Most of the time, getting a personal loan is easy, especially if your credit rating is good. You find out what the current average interest rate is for a personal loan (right now it is close to 12%), then you call around to different financial institutions (such as banks, credit unions, independent loan agencies) to see who is offering the best interest rate.

Where you call can make a big difference when you are comparing interest rates. Banks usually have pretty good rates, but credit unions can often offer a lower rate. This is because a credit union is considered non-profit. Interest rates at independent lending companies are probably going to be a little higher.

Once you have found the best interest rate, you go to that lending company, fill out an application, and wait to be approved. If you are approved, you get a check for the amount of money you need to borrow.

If you can get the preliminary work out of the way by either going on-line or making a phone call, this will keep you from having to make more than one trip to the place that is going to lend you the money. In this way, you can make sure that you don’t have to spend some of the borrowed money for gasoline, and instead can use it for the original purpose.

Remember, though, when you get a personal loan, you will have to pay back the money you borrow. So, make wise decisions, and don’t borrow more than you will actually need.

If you are using the money for a vacation, take a little time to sit down and calculate how much you will be spending for your lodging, how much it will cost to get to your vacation destination and back, and how much you will spend on meals. Don’t forget to add in a little bit of spending and emergency money.

If the money is going to be used to buy an appliance, shop around and get the best price you can before you even borrow the money. This way, you will not be tempted to buy something more expensive just because you have the money to buy it.

If you are using the money to pay off medical bills, get them together, add them all up, and see exactly how much the total is. Then, borrow just that much money, and no more.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Tags: credit union, interest rate, loan, money, personal loans

• Personal Loans: Secured or Unsecured?
• Loans
• Is Debt Consolidation or Debt Relief a good idea?
• Mark To Market Accounting Changes Favor Banks
• Education Loans
• Bad Credit Loans
• Five Questions to Ask When Loaning Money to Relatives
• Four Ways to Finance Your Small Business