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Applying for a Personal Loan

With the continuing rise in the cost of goods, services and other necessities needed to get us by in our day to day activities, it is no wonder why many individuals are forced to look for other ways and means to obtain a little more extra cash. Some would take a second job, sell valuables or in extreme cases, apply for a second mortgage loan on their property. For others, if the needed expense do not require a large sum of money, applying for a personal loan would be the best alternative. Personal loans are perhaps the most accessible loan that you can apply for from any loan company like banks and other cash lending institutions. Personal loans are usually availed to cover any kind of expense such as paying off credit cards, debt consolidation, education expenses, home renovation, car financing, small business needs, wedding expenses and any other expenses that may requires  sizable amount of money. But you most people might be wondering on how to get a loan?

Generally, there are two types of personal loans namely secured and unsecured. Secured loans are usually the preferred type because of the much lower interest it entails. However, the reason it is called a secured loan is because it a type of loans that require some form of collateral which in most cases need to be of the same value with the loan amount you are applying for. If you default on the loan, there can be no alternative but for you to surrender the collateral to the lender or lending institution.

Unsecured loan also known as “signature loan” or character loan is basically a loan that will be provided for you by the bank or other lending companies without the benefit of collateral. The drawback to this type of loan is its interest rate which is unusually higher than normal.

After deciding whether to finally get a personal loan, the next thing to do is find the best financial agency to file for a financial loan. Banks and credit union should be first on your list primarily because these are the institutions that are most friendly to loan applicant and their interest rate are the most competitive in the financial market. Also, it is not uncommon for individuals to file a financial loan with the bank that they have been having a great deal of business with. As a matter of fact these are the type of borrowers that can easily get an unsecured loan simply because the borrowers are already known to the bank.

Here are some lending tips or things to watch out for when taking out a personal loan from a bank or any other financial institutions. First and foremost is to never disregard but rather give importance to the fine prints stipulated on the loan agreement because you just might end up that you have signed to an agreement that is very one-sided and very much in favor for the lender. Things to look out for is first, it should be stipulated in the agreement that there should be no prepayment fees, second, make sure that there are no automatic withdrawals from any of your bank account, and finally make sure that the lending company you are dealing with is legit and above board.