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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
The Biz Question
Personal loans - Know what you need to identify
Answer from our Guest Expert Rick Murphy
Personal loans have a much wider magnitude than what may seem apparent. These loans can help you finance any activities that you may undertake and even help you to consolidate your multiple debts. The two major kinds of personal loans that you can take out are secured loans and unsecured loans. Read on to know more about these in details.
Unsecured loans:
These are the most common kind of personal loans that you can take out. It includes everything from credit cards to payday loans. Such personal loans can be taken out from banks, credit unions or individual lenders. It is advised that you should look forward to taking out a loan from the bank you regularly do your financial transactions with. This is because; if you are an old customer you gradually create a goodwill which helps you to get the loan in better terms, both in interest and repayment context. Taking out an unsecured personal loan can be quite a cumbersome job in today's economic situation if you don't know how to go about it. First of all, apart from payday loans, which entail you to pay an exorbitantly high interest rate, you need to have a stellar credit score to get a personal loan approved. With the rate of loan default getting higher by the day, your personal loan is permitted based on your credit report. Your credit report basically consists of your debts and your defaults and your entire financial history. The higher defaults or late payments you have, the lower is your credit score. So in order to get your personal loan, you better improve your credit score in various ways that is possible. Another important fact about unsecured loan is that these have a high interest rate.
Secured loans:
When taking out a personal loan a lot of people prefer a secured loan for a number of reasons. Firstly, although your credit score is important, it doesn't stand topmost in the deciding factor. This is because in secured loan, you basically get a loan in return of collateral that you offer. Since there is already a security on the loan, the credit check is not very stringent. Also, the interest rate on a secured loan is always less than an unsecured loan. This is because the lender has the guarantee of getting something back in return if you default on the loan. Thus you are not charged a high interest rate which is basically a risk margin for lenders. In a secured loan you can put anything as collateral from your house, car. Jewelry, bonds and so on. However, you have to be very careful to pay the loan back. This is because when you fail to pay back a secured loan, your collateral is confiscated.
Thus you see both types of personal loans, secured and unsecured have their own perks. You have to choose the one that is most convenient and most suitable for your current financial condition.
About our Guest Expert: Rick Murphy
Rick Murphy is a writer associated with debtconsolidationcare[dot]com. He holds his expertise in the debt industry and has made significant contributions to the field through his various articles.To get more debt related help visit: http://www.debtconsolidationcare.com/debt-settlement.html
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