A loan is simply an agreement to pay back an amount of money that has been borrowed, along with any interest, and sometimes finance charges or application fees.  Loans can be as simple as someone you work with loaning you $20 and you paying them back $20 on payday, or as complicated as a bank lending you enough to start your own business, and you pay the bank back within a specified length of time.

Usually, when we see the word “loan“, we’re talking about an amount that is most likely over $100 dollars, and is obtained through a lending institution of some sort.  (Banks, credit unions, and independent loan companies are examples of lending institutions).

There are different types of loans; however, most loans fall within one of two categories: (secured and unsecured loans), and personal loans.

Unsecured personal loans are often referred to as “signature” loans.  The lending institution does not require you to “put up” some form of “collateral”, such as a bank or money market account, or some form of personal property (a car, home or other real estate, or something else of value).

Some financial institutions may ask you to have someone co-sign with you on an unsecured loan, however.  In this way, should you be unable to repay the loan, the co-signer would be responsible for the payments.

Secured loans are those that require you to provide some sort of collateral, such as that mentioned in an earlier paragraph.  The most common or familiar type of secured loan is an automobile loan, because the lending institution maintains control of the ownership papers (the title, in other words), until the loan is paid in full.  If the loan is not repaid, or payments become severely delinquent, the lending institution simply takes possession of the vehicle.

Another example of a secured loan is the very common payday loan.  You may think that this type of loan would be considered an unsecured signature loan, because, after all, you’re giving them a post-dated check, which has your signature on it.  However, when you think about it, you are actually securing this loan with funds that will be (or should be) available in your checking account on the due date.  If for some reason the money is not in your checking account when the check is presented to the bank, you will be “dinged” for the original loan amount, plus any interest, plus any insufficient fund fees that the loan company and/or your bank charges.  There are usually better options for obtaining a personal loan than a “payday” loan.

A business loan may be acquired in order to start a business, or in order to expand or support an existing business.  These are usually the most complicated types of loans. For this reason, anyone who takes out a business loan may want to have an attorney to look over the terms and conditions of the loan agreement.  This is for the borrower’s protection as well as the lender’s.

The ability to pay back a business loan is, of course, dependent on the success of the business.  The loan will still have to be repaid, even if the business fails.  This is another reason why an attorney can be an asset.  He or she can advise you on how much to borrow, and which repayment terms will be the best for your business.

Tags: automobile loans, loan, Loans, payday loans, personal loans, small business loans

Personal loans are loans that are applied for by and (hopefully) given to individuals. In other words, a person, rather than a business, corporation, or organization, wants to borrow money. Personal loans can be either secured or unsecured. Unsecured personal loans usually only require a person’s signature. The individual does not have to “secure” the loan with any type of collateral, such as a car, boat, or other personal property.

Sometimes, a financial organization may require a co-signer on an unsecured loan. In this way, if the original borrower cannot (or does not) repay the loan; the co-signer is responsible for the payments. The co-signer, however, does not have to put up any personal property either (unless that person wishes to do so).

Unsecured loans are usually fairly small. Some financial institutions will only lend up to a certain amount on an unsecured loan before they require that the loan become “secured“. While many lending agencies may offer unsecured loans, frequently, this type of loan is most often offered through a credit union or other similar organization. This does not mean that a bank, independent finance company, or other financial institution will not offer unsecured loans. One needs only to inquire at the place where he or she wishes to complete the loan application to find out if unsecured loans are offered.

An unsecured loan may very well be the first loan a young person applies for and receives. This is because the loan amount is usually fairly low, and the process itself is generally easier than that required for a secured loan. Unsecured bad credit loans will likely have a fairly low interest rate, and the monthly payment is usually very moderate. This makes an unsecured loan even more attractive, especially to a person who is just beginning to build his or her own personal financial history.

Obtaining an unsecured loan, making the payments on time, and paying the loan back within the specified time (if not a little early) are a very good way of starting a sound credit history. When and if the time comes that an individual is in need of another loan (whether unsecured or secured), creditors will have something to look at. If a lender likes what he (or she) sees, then there should be no problem when a person applies for a loan in a larger amount.

Once an unsecured loan has been repaid in full, a borrower may be able to make another unsecured loan, after a sufficient amount of time has passed. As long as each loan is paid off on time, with no late payments, the borrower can continue to obtain unsecured loans whenever it is necessary.

Personal loans are usually made with a repayment period of one to three years. The longer the repayment period, the less the monthly payments will be. A “first-timer” may wish to opt for more time in which to pay back the loan, as this will give the borrower a chance to practice and hone budgeting and payment responsibility skills.

IF a problem arises with repayment, an unsecured loan can usually be “extended”. This simply means that the remaining balance is re-financed, and the borrower is given more time to pay off the loan. If the borrower sees that this situation may be imminent, he or she should immediately contact the creditor and explain the circumstances. The lender is more apt to work with the individual if other arrangements are made before payments become delinquent.

Tags: bad credit loans, creditors, lender, loan, Loans, personal loans, secured personal loans, unsecured personal loans

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.

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