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Personal Bank Loans

Options

Generally speaking, there are two types of personal bank loans:

– Secured, which will require you to put up an asset, such as a home or car, for collateral. In exchange, you get a lower interest rate, and potentially a better chance at being approved.

– Unsecured, which can be harder to get approved for, particularly if your credit score is less than perfect. Interest rates are higher, but, on the other hand, there is no risk of losing your home or car if you cannot pay.

Though a secured loan can be very tempting, it is important to take a step back and consider whether or not it is worth the risk. You will also want to look into other options that your bank might have, such as auto loans that might be more favorable for your purposes.

Your Local Bank or Credit Union Can Help

Being an account-holding member in good standing at your local financial institution can make it far easier to be approved. They will often look at the account balance and age when you apply. Generally speaking, the higher the better. It is a good idea to make this your first stop in the search. Keep in mind, also, that credit unions may be more willing to take risks than larger institutions, and as not-for-profit establishments, they can offer lower interest rates.

Consider Your Credit Score

When you apply for your personal loan, nearly everything from the interest rate to final approval is determined from your credit score. Search the web for sites that let you make a “soft” inquiry into your rating; this pings the major credit bureaus without hurting your score. Some will give you a fairly detailed report on all major factors, including open accounts, late payments, collections, and other records. This knowledge can help you take the right actions. In general, though, it is good to make at least the minimum payments on all accounts on time, every time. You may also consider getting a credit card to help build your rating, but be careful with your spending.