Loans Options Besides Payday Loans

People can choose to receive several types of personal loans without going to a large bank or resorting to taking out payday loans. If people who only need small amounts of money were to go to a large institution for bank personal loans, they would not receive them because the amount requested would be too low. There is always the option for borrowing from friends, but that can often strain the relationship. Here is a list of loans options for someone who is not in immediate need of money.

Alternative Loan Options

Secured Personal Loans

The better option is to seek one of the many types of personal loans in existence. The secured personal loan requires that people have something to offer as collateral. Generally, a house, an automobile and other qualifying assets will entitle these people to receive low interest rates. They are also loans that are relatively easy to receive, because the asset reduces the lenders’ risk of not receiving their money back.

Unsecured Personal Loans

The unsecured personal loan does not have assets attached to it and for this reason, the interest rate will be higher; lenders are taking a bigger risk when they loan people unsecured funds. It’s also harder to meet the requirements to receive this loan, as lenders will perform a credit check. Those with high credit scores can receive the lowest interest rates, but those with low scores will have higher repayment rates.

Personal Loans for People with Bad Credit

People who have a bankruptcy, foreclosures and collections activity on their credit reports can apply for personal loans that were created with them in mind. These people will not have to submit to a credit check but because of this, the interest rate may be on the high side. These types of loans also eliminate the need for the borrower to have to present any documentation before they can be approved for the loan and receive money.

Prosper.com is one online lending establishment where people can create their own loans. Borrowers will just have to give some personal information on the online form in order for Prosper.com to verify the applicant’s identity. Then they will check their credit reports to obtain the credit score which will be used to determine the interest rate.

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