Get an unsecured personal loan to help pay bills and debts.

A personal loan is usually shorter term credit that is provided to you in order to help you meet your personal needs. Some uses of them can be to consolidate debt, pay off bills, provide money for emergency situations like a medical condition, and more. Generally these types of loans are unsecured, which means that as a borrower you will not be asked to put any collateral against the borrowed amount and will not need to put up any security backup. In other words, the personal loan you receive from a lender will be determined based on both your integrity and the ability to repay it. So this means they may come with a slightly higher interest rate. There are many lenders that provide personal loans, including major banks, finance companies, and other private lenders.

How to get a personal loan

Numerous banks and financial institutions provide personal loans, and they can be used for numerous reasons, such as to help with bills and debt consolidation. Each lender has its own criteria, and the loan amount and the eligibility for each loan varies from bank to bank. The lenders will evaluate you on multiple criteria, including, but not limited to, your work experience, household income, your ability to repay the loan, where you work, past obligations, age, and where you live. These various criteria will also go into determining what your interest rate is. You do not need to tell them what you plan on using the unsecured personal loan for.

What are the interest rates?

When a lender decides that you are a higher risk, but still decide to extend you credit, they may decide to charge you a higher interest rate to make up for the higher risk they think you may be. For example, if you have bad credit, the interest rate will be higher than if your credit scores are great. In certain cases, a bank may request additional security, and maybe it will be in the form of a personal guarantee that will be based on risk profile of the borrower.





Usually the interest rate that you are charged on an unsecured personal loan could range from anywhere between 12 to 25 percent. These rates are still better than most credit cards and much better than terms from a payday lender. So a loan can be used for debt consolidation because the rates will be better than the alternatives. More on debt consolidation. If you are applying for a bad credit personal loan, the rate may be in the 25% range (or higher). The factors indicated above determine your rate, such as risk profile, employment, and income level.

As an example, suppose you work in a well respected industry, and a company with a strong reputation. You may very well get a personal loan at a lower rate because of that when compared to say a self employed individual. The self employed person may end up receiving a loan of the same dollar amount, but it may be at a higher rate of interest because the self employed person may be considered higher risk when matched up with the person in the well respected company.

Interest rates are determined in a variety of ways and by many factors. The interest rates can be variable, fixed, or flat. A flat rate is the most expensive, and it is a personal loan that charges the same interest based upon the principal amount throughout the tenure of loans. Compare that to a fixed and variable interest rate secured loan, in which rates are calculated on the reducing balance (as the loan is paid off) and these loans are comparatively less expensive as the amount of interest you pay declines as the loan is paid off.





Unsecured personal loans payment terms

Terms vary, but personal loans are always shorter term loans and the most common are repayable over a period of time that may range from 12 to 60 months. Rarely will a loan go for longer than 5 years.

While as mentioned, the repayment terms of unsecured loans will vary, for most lenders the prepayment fee on a loans is very expensive, and be sure to review this when deciding to borrow to meet your short-term needs. For example, if you are borrowing to pay some short term bills, and want to repay the loan in several months, if the prepayment fee is too high it may not be worth borrowing. Be sure you read closely and understand the stated conditions and terms and before accepting the loans offer. Review all fees and penalties, and always check to see if there are other charges, penalties, or fees.

As with all loans, you should only borrow when your need for short term cash is very high. For example, do not use them for a vacation! Using an unsecured personal loan to pay an unexpected bill, such as a medical emergency or consolidating debt may be good options. If any personal loans is not appropriately repaid and used they will increase your debt burden and increase your hardship.








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