If you currently have a checking or savings account with a financial institution, you may want to inquire about the type of unsecured signature loans it has available. Many banks offer a wide range of services to established customers. Be sure to inquire about any applicable fees, as well as the interest rate the financial institution will charge you. Prices may vary significantly among lenders. The higher the interest rate, the more the loan will cost you over time.
Unsecured signature loans typically do not require collateral. They are granted to borrowers based on their ability to repay the debt. A number of factors — such as the consumer’s credit rating, current financial obligations, employment history, and available income — can help a lender determine a person's credit-worthiness. If your credit rating is good and your debts are minimal, you will probably have more options available to you.
Some lending institutions offer a special, introductory interest rate as low as 0% per month. Most of the time, the offer is temporary and may only apply to the first few months of the loan. If you plan to repay it immediately, this may be an excellent option for you. The trouble with these deals, however, is that at the end of the introductory period, interest rates may skyrocket. If unforeseen circumstances prohibit you from fully repaying it as planned, you could end up spending a lot of money on accruing interest as opposed to paying off the principal balance.
People with marred credit histories and excessive financial obligations may have trouble qualifying for unsecured signature loans. If they are approved, they will likely pay higher interest rates, in addition to other fees. Lenders are less likely to extend credit to individuals with a limited ability to pay it back. Sometimes, financial institutions require collateral so that if payments are not made as promised, the bank does not lose the money it lent to the borrower. In these cases, the loans are secured.
You should be especially cautious about applying for loans over the Internet. Some online companies that offer unsecured signature loans prey on people who have less-than-perfect credit. They may offer to lend money in exchange for exorbitant fees and very high interest rates.
Other Internet websites may even be set up to fraudulently swindle people out of money. You should be wary of a lender who offers to issue you a loan that requires you to first pay a fee. Furthermore, to avoid becoming a victim of identity theft, make sure that the financial institution is legitimate before revealing any personal information. It is always important to bank with an institution you trust.