Does searching for personal loans online leave you scratching your head in confusion? There are so many technical terms, sometimes it’s difficult to know which products are right for you. Fortunately, it’s not as confusing as it first appears once you know more about common loan types.
Secured vs. Unsecured
When you search for personal loans online, they fall into two main categories: secured and unsecured.
Unsecured: Most personal loans are unsecured, meaning they don’t require collateral. The lack of collateral increases the risk for lenders, so to get the best terms for an unsecured loan you need a healthy credit score.
Secured: Secured loans require collateral. Some lenders offer secured personal loans, which have more favorable terms than unsecured loans, as the collateral offsets the risk.
Fixed vs. Variable
Personal loans either have a fixed rate or variable rate (otherwise known as an adjustable rate). Both types of loans have advantages in certain situations.
Fixed rate: Most personal loans have a fixed rate. This means your monthly payment stays the same for the life of the loan, making it easier to budget. As rates may change significantly over time, fixed-rate loans help you to lock in value for long-term borrowing.
Variable rate: Variable rates may fluctuate over time depending on the current economic climate. Often, the starting rates for such loans are lower than fixed rates for similar products. This makes variable-rate loans a good choice for short-term borrowing.
Debt Consolidation Loans
Debt consolidation loans offer a way to roll multiple debts into a single monthly payment, ideally with more favorable terms. For example, you could use a new loan to pay off multiple credit card balances so you only have one payment to remember each month. When you use debt consolidation loans, you aren’t reducing your total debt — you’re restructuring it so it’s easier to manage.
Finding a Personal Loan
Even if you know a lot about the types of products available, searching for personal loans online isn’t always easy. It takes time to find lenders and compare products. Furthermore, when consolidating debts, you need to ensure your new loan is more favorable than your existing loans. If the task seems too daunting, contact Refi. The loan validation and matching service helps you find the right products for your needs. Visit Refi.com and complete the online loan inquiry request today to learn more.