Instant Quick Money Cash Advance Personal Loan Til Payday

Are You Looking to Apply for a Personal Loan? Read On for Important Personal Loan Resource Information.

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The once popular unsecured personal loan has become increasingly rare in our modern society. Although you can still get one from some banks, an unsecured personal loan, or “signature” loan,  has become a somewhat unique way of financing purchases. The massive proliferation of credit cards, which are a form of unsecured loan, and changes in the IRS code in the mid-80s that eliminated tax deductions for many consumer interest payments, have made unsecured personal loans much less common. Also, personal loans have given way to modern payday loans and cash advances. But personal loans are still out there at banks and credit unions for people with a sudden need for money and a clean credit history, established employment and residency, and a low debt-to-income ratio.

Financial institutions don’t care much about how you use an unsecured personal loan as long as you are a good candidate to pay it back. Typically, the purpose of the loan is not of any interest to the lender. The only hitch is that because the borrower has no collateral, unsecured personal loans are more expensive.

The average interest rate is higher than a home equity loan. And unlike home equity loans and lines of credit, unsecured loans are not tax-deductible. Even credit cards can be cheaper than unsecured loans. You should check a credit card’s rate information before you make a personal loan move. And remember, besides interest, you commonly have to pay an annual service or maintenance fee on the loan that is either a flat fee or a percentage of the lump sum.

With the expensive nature of these unsecured personal loans, you may wonder who actually uses them. The answer? A wide variety of people, from lower income to high income. These loans may be the easiest to get for people whose income and savings are at lower levels. In many cases they may be the only sort of loan — whether it’s for emergency or fun money — that they have a shot at from mainstream sources. Folks in the upper-income brackets are heavy users of unsecured loan privileges, too, often in the form of large lines of credit attached to checking accounts.

There are two major types of unsecured personal loans: lump sums and credit lines. Lump sums, also called closed-end loans, usually carry a fixed interest rate, while lines of credit carry an adjustable rate.
A line of credit may cost more than a closed-end loan because it moves with fluctuating interest rates.

The term of a closed-end loan depends on your credit standing – the better your credit, the longer the bank will give you — and how much you borrow. The shorter the term, the less the loan is going to cost. For example, if you borrow $10,000 at 15 percent interest and pay it back in 48 months, you will pay $278.31 a month, or $13,358.88. If you pay it back in 60 months, your monthly payments are less — $237.90 — but you will pay a total of $14,274.

Line of credit unsecured loans work like a credit card only with a time limit. A bank may approve you to borrow $10,000 for three years. Your credit revolves as you pay it off — borrow $2,000 and pay it off and you can still borrow $10,000. If it’s not paid off you can only borrow $8,000. Either way, you must pay off everything when the three-year time limit comes up.

To pay back lump sums, banks usually issue coupon books. Lines of credit often come with checks so you can withdraw different amounts. Keep in mind that automatic payments deducted from a checking or savings account might cut your interest.

How much can you expect to haul away from the bank on your own recognizance? The amount you can borrow unsecured can vary from $1,000 to about $35,000. Bankers can get antsy about loaning large amounts to the average customer without collateral.

Bad Credit Personal Loans
Although there are still a number of banks and lending institutions who provide personal loans to people with good credit, there are relatively few who are disposed to extend the same offer to those with less than perfect credit. Because of the much higher chance that an individual with bad credit is likely to be unable to repay a personal loan, most well-known lending institutions do not provide such individuals with a personal loan.  There are however, lenders who are willing to provide personal loans to those with bad credit histories.  For more information on such lenders, see our Personal Loans page.

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