About Personal Loans

By Sharon L. Cohen

  • Overview

    About Personal Loans
    People need personal loans for many reasons, from short-term emergencies to 30-year home mortgages. These loans are available from large financial institutions as well as small, private companies. Borrowers should make sure that the lender is reputable before requesting financial support.
  • Features

    The lender will want to know the specific type of personal loan required, which will be based on the purpose of the loan, the amount of money needed and the length of time for repayment. The interest rate will reflect the type of personal loan and the credit rating of the borrower. Loans are either secured or unsecured. The secured personal loan is backed by some type of collateral, such as a home or car, in case the borrower defaults on payments. Its interest rates and monthly payments will be lower. The unsecured loan is not backed by collateral but requires a high credit rating.
  • Bridge Loans

    Borrowers take out a bridge loan when they have a cash flow problem when purchasing a house, land or business or paying for a renovation. Many people request bridge loans when they must buy a second property before selling the first. These loans, which have higher than usual interest rates, need to be paid off in a short period. A bridge loan to buy a piece of land is secured with a mortgage on the newly purchased property and a second mortgage on the property that is up for sale.

  • Consolidation Loans

    Especially at difficult financial times, borrowers want to consolidate all of their debts into one larger loan. Credit card bills, car loans and mortgages can be paid together each month. This lowers the interest rate on the credit cards and reduces what is owed each month. The consolidation loan helps borrowers who have high debts, many sources to repay and difficulty making their regular payments.
  • Emergency Loans

    Emergencies often arise in people's lives, and they need money immediately. An emergency cash loan provides cash for such essential items as groceries, outstanding bills and health care costs. Because an emergency cash loan has a higher risk than a typical loan, the borrower must pay a much higher interest rate. Normally, the loans are paid back within a few days.
  • Payday Loans

    For many consumers, it's difficult to go from one payday to the next. They need to have extra money for a couple of days until their check comes from work. These loans are not difficult to obtain, but they have very high interest rates due to their high risk. Some lenders will even give payday loans to individuals with low credit ratings or who were turned down for mortgages and other loans.

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