The Top Five Personal Loans For Consumers


Whether out of necessity, for convenience or for mere indulgence, a growing number of Americans are availing themselves of the personal loan, finding it to be a suitable solution for their individual needs. Consumers are applying for personal cash loans to satisfy one of three types of expenses: 1) Ordinary, everyday expenses such as an auto purchase, home improvement, travel, a getaway vacation, a wedding, and business expansion; 2) emergency expenses such as debt consolidation, health care, late education fees, and appliance repair; or 3) luxury expenses such as cosmetic surgery, a diamond necklace, casino gambling, spa treatment, and horseback-riding classes.

A personal loan can be either secured (collateral required) or unsecured (no collateral necessary). The most popular types of fast cash personal loans are as follows:

1. Unsecured loans

Some of the most common forms of unsecured loan products are bank overdrafts, credit cards, and store cards. Since applicants need not pledge any collateral as security for the funds requested, an unsecured personal loan is accessible to non-homeowners, such as tenants and students living at home. Since no personal assets are at stake, there is no threat of repossession. All that is required is a signature and/or a co-signer. The speedy application process, which involves minimal paperwork, makes it extremely easy to qualify for an unsecured fast personal loan credit. It is also an optimal personal loan for people with bad credit since foreclosures, repossessions, and bankruptcies, and other tarnished credit issues are disregarded. The loan proceeds may be utilized for any purpose envisaged by the borrower. With an unsecured personal cash loan, the interest rates and monthly payments are fixed; this means that borrowers pay the same amount each month.

2. Payday cash loan

This easy personal loan provides emergency cash to individuals undergoing a temporary financial crisis. It helps cash-strapped consumers make ends meet until their next payday. For instance, a payday cash advance loan may be used to avoid a bank overdraft or bounced check or to pay urgent, unexpected bills. The funds requested are usually available on the spot and transferred to the applicant's account overnight, or within 24 hours. Eligibility requirements are simple and easy to meet. To qualify for this unsecured, short-term personal loan, consumers must 1) show steady employment and 2) have a savings/checking account with direct deposit.  This is an ideal personal loan for bad credit due to the fact that payday loan providers waive the credit check requirement. Therefore, individuals with a poor credit score are not disqualified from applying for such a loan, and a low personal loan rate is available to them irrespective of their credit history. A payday cash loan is repaid in two weeks. It has no adverse impact on an applicant's credit rating or score.

3. Guaranteed personal loan

This is a secured loan that requires applicants to put up some valuable property such as a home, automobile or jewelry, as collateral, to obtain approval. The advantage offered by the guaranteed personal loan is a lower interest rate, since the funds are secured with an asset. Individuals are eligible for this personal loan regardless of their credit-worthiness. A guaranteed personal loan offers borrowers other benefits including:

  • use of the loan proceeds for any personal need;
  • the opportunity to improve their credit score;
  • the chance to apply online for quicker approval; and
  • preferential payment terms which translate into affordable monthly payments

4. Bad credit personal loan

Many lenders specialize in serving borrowers with a blemished credit record. The bad credit personal loan is extremely advantageous for individuals on the verge of bankruptcy or with other stains on their credit record, as it allows them to improve their financial condition and enhance their credit rating. This personal loan for people with bad credit is called a signature loan because the only collateral that a lender requires is the applicant's signature on the loan documents. Borrowers can expect fast approvals and immediate access to the funds. The loan proceeds may be utilized for any purpose, ranging from buying a boat to debt consolidation and vacations. The bad credit personal loan is very popular among college students who use it to fund such educational needs as dorm room furniture, electronic notebooks, and school supplies. Finally, consumers with good credit who apply for this type of loan are guaranteed a low rate of interest.

5. Secured personal loans

Although a secured personal loan requires applicants to pledge collateral to be approved, it offers them cheaper financing than alternative credit and the opportunity to borrow a larger sum of money. The interest rate on a secured loan is lower than that on an unsecured loan because the security provided (i.e. collateral) signifies a reduced risk for the creditor. This type of loan is optimal for consumers seeking substantial funds to finance property renovation, travel, business start-ups, furniture or vehicle purchasing, or other important personal and business endeavors. A secured personal cash loan offers numerous advantages, including:

  • A more generous credit range
  • Low rates of interest
  • A choice among repayment methods
Posted by Yara Zakharia, Esq., Contributing Editor, on October 8, 2007 at 12:00 AM