Since there are so many personal loans and loan companies to choose from, it makes sense to compare them. You have a few options from our top lenders, and which one you choose will depend on whether or not you own your home, your situation, and your loan preferences.
There are a number of important differences between personal loans that are secured and those that are not. Secured loans require the borrower to put up his or her home or other property as collateral or security for the loan. This is not a requirement for loans with no collateral. Secured loans have lower interest rates than unsecured loans because the lending company is taking less of a risk if you don't pay back the loan. This is because your home acts as insurance against you not paying back the loan. Before you agree to a loan, you should make sure you can pay back the debt. If you can't, you could lose your home if you don't. Even when a loan isn't secured, lenders have been known to act aggressively to protect their money and will go to court if they have to. When you compare secured and unsecured personal loans, you'll notice that secured loans are approved faster than unsecured loans, but they take longer to process. This is because secured loans are less risky for the lender. With a secured loan, this means you will have to wait a little longer to get your money, but it will be well worth the wait when you save money on the interest rate.
There are different loan amounts and terms for personal loans, and they are paid back every month. The lender will charge you interest, which is called the APR or Annual Percentage Rate. When comparing personal loans, you can get a good idea of how competitive they are by looking at the APRs. Companies that lend money advertise average interest rates, but these are just estimates of what you might get. The interest rate you're given depends on a number of things, such as how much you're borrowing, how long it will take you to pay back the loan, and your personal situation and credit history. You will also notice that lenders talk about interest rates that are either fixed or changeable. There is one big difference between personal loans with a fixed rate and loans with a variable rate. With a fixed rate, the amount of your monthly payment stays the same for the whole length of the loan. This makes it easier to plan your budget because you know exactly how much you'll have to pay each month. With a variable rate, your monthly payments could go up or down depending on how the bank base rate changes. This gives you the freedom to save money if the interest rate goes down. However, if the rate goes up, your loan could end up costing you more.
When you compare personal loans, you should also look at the lender's policy on penalties for early repayment. Some companies will charge you up to two months' worth of interest if you pay off your debt early. If you think you might want to pay off your debt before it's due, it might be worth it to get a loan with a slightly higher APR but no penalty for paying it off early.
