All you need to know about personal loans
Personal loans, sometimes called unsecured loans, allow flexible use, short—to moderate-term repayment options, and quick funding. Their versatility and convenience make them popular for borrowers of every financial standing. Let's take a deeper look at them and their pros and cons.
How personal loans work
If you're interested in a personal loan, visit your credit union in person or online and fill out an application. And pending approval, you can walk away with the requested lump sum in one to three business days. You'll need to repay the loan's principal and interest over the loan's term, which can be as short as six months or as long as seven years, depending on your lender.
Unlike most other loans, like home and auto loans, personal loans are not for a single, specific purpose. Instead, once the money is in your hands, you can use the loan however you please.
The Pros
There are several distinct advantages to borrowing money through a personal loan.
First, personal loans give the borrower the freedom to spend the funds however they want. Second, most of them are unsecured, which means there is no asset backing up the loan or risk of being repossessed if the borrower defaults. Finally, obtaining their approval tends to be much faster than most other loans and can happen in 24 hours or less.
The Cons
There are some disadvantages to personal loans that borrowers should be aware of before proceeding.
First, as unsecured debt, personal loans not backed by collateral will likely have a higher interest rate than loans borrowed against an asset like a home or a car. Also, a lender can sue the borrower in court even if a personal loan is unsecured. They can also obtain a lien and place it on the borrower's assets. Finally, the money you can borrow through a personal loan may be significantly smaller than other loans.
If you're ready to take out a personal loan, call, apply online, or stop by Elevate Credit Union today!