Personal Loans Shouldn't Be A Crutch

Online, November 17, 2011 (Newswire.com) - A loan, as most people understand it, is a debt. And like all debts, a loan means there's a lender and a borrower, there are terms and, more than likely, there is interest. Most people who need loans need cash quickly, but many aren't willing to put their homes or other property on the line in order to obtain the loan. This is where a low interest personal loan can be useful.

Personal loans, usually for less than $10,000, can be obtained without collateral, and with interest rates lower than credit cards. But low interest unsecured loans are not available to everyone - if your credit is bad, you will likely have to apply for a secured loan, and provide collateral to give the lender assurance you'll repay the loan.

If you have a good credit score, you can get a personal loan at a bank or credit union, and if you deal with the bank where you already have a checking or savings account, you can get an even better deal.

But there are also online lenders for personal loans. Very often, these lenders can offer interest rates lower than the banks, because they are virtually unaffected by what's going on in the economy.

An unsecured personal loan, for a smaller amount, can be very useful. The loans can be used to consolidate debt, which will combine all of your debt into one manageable monthly payment, often at a lower interest rate. The loan can also be used for large purchases, such as appliances or furniture, or for emergency medical care or car repairs. The loans can also come in handy if your home is in need of some sort of repair or you'd like to make some improvements.

But bear in mind that you shouldn't become dependent on personal loans. You don't want to make any kind of debt a habit, particularly if you use it to get rid of older debt or for emergencies. A better plan would be to start an emergency fund, and put a little money away for those unexpected occurrences.

Whatever option you choose, you'll want to make sure that you do the research and find out what option is best for you and your situation. Factor in terms, interest rates, fees and what you can afford. Only then can you make an informed decision that will be a positive - and not a negative - in your life and in you bottom line.