February 2, 2014 By

Personal Loans Offered by Institutional and Private Lenders

Many financial establishments offer personal loans, including banks, credit unions, payday lenders, and peer to peer platforms. No interest loans help reduce the cost of borrowing. Attractive deals are usually offered to customers with a stable income and excellent credit.

Types of Financing

Enjoying each other's companyIn addition to conventional solutions, some banks offer mobile home, auto, marine, and other low rate personal loans. If you are a recent graduate and plan to finance the purchase of a vehicle, you can apply for a loan with no prepayment penalties, flexible repayment terms and schedule, and deferred payment. Some of these loans are unsecured while others require collateral in the form of a valuable asset such as land, real estate, vehicle, or anything else of value. Mortgages are the most common type of secured financing. Financial institutions offer different options, including all inclusive, preapproved, 6 month convertible, and equity mortgages. Borrowers can choose from high ratio and conventional mortgages and bridge financing. When choosing a secured loan, it is important to consider factors such as acceptable types of collateral, the down payment, variable vs. fixed interest rate, and others. Insurance is not required if you make a sizeable down payment. Some types of secured loans require little money down, for example, high ratio loans and some federal loans.

In addition to these types, there are reverse, interest only, and balloon mortgages. Reverse mortgages, for example, are designed for senior citizens and allow them to access their home equity. Other types of financing include home equity loans, cash advances, and payday loans.

Risky Loans and Alternative Sources

Payday loans are considered risky because of the high interest rate. Borrowers with a poor credit score are likely candidates because they have few options available. Usually, payday lenders require that borrowers have a stable job and a bank account. While a verifiable source of income is one of the main requirements, you must of a citizen or resident of the age of majority. These are short-term unsecured loans with a term that usually varies from 2 weeks to 1 month. The default rate is between 10 and 20 percent, which means that lenders take more risk compared to banks and credit unions. The interest rate is very high, with some lenders offering an APR of close to 400 percent. Other options for debt-ridden borrowers include cash advances, loans from friends and family, and peer to peer platforms. Peer to peer lenders are one option if you are looking for low rate personal loans. This is one alternative to banks and credit unions whereby online platforms serve as an intermediary between borrowers and lenders. According to platform owners, the default rate is low meaning that individual lenders take less risk. A cash advance and a loan from your employer are two options to consider. Finally, if you are new to credit, you may want to apply for a secured or prepaid card.

Filed Under: Loans Tagged With: , ,
January 25, 2014 By

Secured and Unsecured Loans for Your Personal Needs

loansThe choice of lender depends on whether you are looking for a home equity, car, student, or consumer loan. As a rule, mortgage loans come with a longer repayment term and lower rate of interest because collateral is required. Banks accept different types of collateral, including real estate holdings, vehicles, collectibles, and others. Banks offer better terms to borrowers who opt for a secured loan because they can seize the collateral in case of default. Financial establishments that offer personal loans for people with bad credit include credit unions, online banks, finance companies, and others. There are different types to choose from, including mortgage, consumer, auto, and student loans.

Secured and Unsecured Loans

Unsecured loans are different in that borrowers are not required to offer collateral. Whether your credit score is excellent or fair makes a difference. The choice of lender is also important – you may want to contact you local bank first if you are a regular customer. Another option is to apply through an online bank. They save on salaries and utilities and offer attractive deals. Going to your local bank can be time-consuming. In addition to loans, they offer checking and savings accounts, and clients benefit from online customer service.

Lenders

The lending service is responsible for the logistics. Borrowers who need a short-term loan sometimes apply with payday lenders. While this is an alternative to traditional lenders, the interest rate is high. Payday lenders claim that the interest rate is higher because of the higher risk of default. Payday lenders are other options for borrowers who are dissatisfied with brick-and-mortar institutions. The main benefit for applicants is that they can choose from different repayment schedules. Borrowers are offered business and personal loans. In many cases, borrowers pay less in interest because lenders have less overheads. While there are advantages for borrowers, decent credit is usually required.

Individuals can apply for both private and government loans. Student loans are one example of government assistance that offers repayment benefits. This is one alternative to grants and scholarships that comes with affordable interest rates and payments. This is also a good way to establish credit. Unlike private loans which come with variable or fixed interest, the government offers a fixed rate. While the interest rate is lower than credit cards and other types of financing, it is important to make timely payments. Public employees such as employees in non-governmental organizations, public school teachers, and government employees also qualify for loan forgiveness. There are different types of forgiveness, including closed school and bankruptcy in discharge. Other examples are public service and teacher loan forgiveness.

Filed Under: Loans Tagged With: , ,