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Personal loans are loans that are unsecured loans to an individual or to a business. These are sometimes called signature loans because all that backs them up for the lender is the borrower’s promise to repay the debt they have signed up for.
Personal loans are available from several resources. Banks, credit unions and other financial institutions will offer signature loans to persons who have excellent credit. There may be limits to the amounts available and these often are for a short time period. For example, you may get a vacation loan that is an unsecured personal loan for up to $1000 and spread payments over six months to a year. Larger amounts may be borrowed depending upon the lending institution’s policies.
A business can get personal loans in the business name. These also can be backed by an individual’s personal guarantee of repayment. Still there is no collateral involved. With secured loans the borrower must pledge an asset like a house or a vehicle to back up the loan in case they default. If the borrower does not repay the loan on time the lender can seize the asset and sell it to recoup any amount owed.
Small personal loans are also available from the payday loan industry. These can be from $100 to $1500 in most cases but the loan is due very quickly. These are short term unsecured loans that last only until the borrower’s next payday. A check or ACH form is the backup for these loans and if the borrower defaults it is the same as writing a bad check.
Getting personal loans is not difficult if you have a great credit history. Without having a good credit record the only place to get an unsecured personal loan may be from a cash advance lender.
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