Sometimes we find that we're running low on cash on a project that may pay off in a big way. Or sometimes we need to purchase something in advance at the same time other bills are due. When a car breaks down for which you will have the money in a month or so, then you may wish to turn to a personal loan to take care of things.
While not a cure-all, by any stretch, a personal loan allows you to get an unsecured line of credit from a bank or credit union. Unlike ordering a credit card, a personal loan can often be approved in one to three days, tops. Additionally, most banks really don't care what you intend to do with the credit, so you don't have to explain anything to a bank manager, such as you would in a small business loan situation. All the bank or credit union cares about is that you have the wherewithal to pay your personal loan back and a credit history that shows you pay back things like a personal loan.
While there seem to be fewer strings attached to a personal loan, this is only an illusion. Where the strings show up is in the back end of the personal loan in the form of higher interest as well as an annual service fee. In addition, the interest on personal loans are not tax deductible, unlike small business loans or student loans.
If you don't have to have your money immediately, you may want to compare interest rates between credit cards before you look at personal loans. Often times, a credit card interest may range from 7% - 13% where as a personal loan can range from 14.9% - 28.9%. Either form is substantially preferable to the payday advance and check cashing places, which can have fees even higher than the highest personal loan's percentage.
This is also a very important consideration if you're wanting to buy technology with the money from your personal loan. Say you secure a 14.9% interest rate on your personal loan from a bank, it will be far preferable to get the money you need at that interest rate before you go out shopping for technology than it will be to finance your purchase at stores like Best Buy or Sears, whose introductory interest rates start out between 20.9% - 22.9%.
Again, as with all loans, the key to finding a good personal loan is be willing to shop around from bank to bank. While you may have to open a checking account with a particular bank or credit union in order to get a personal loan from them, you may easily find that the money you save in interest is well worth the search.
