What is a Personal Loan?

One of the ways that you can fund purchases is with the help of a personal loan.

Personal loans come in a variety of shapes and sizes. And, as with all loans, your personal credit plays a role in determining the type of loan you can get, as well as the terms associated with the loan.

Unsecured Loans for Any Purpose

For the most part, personal loans are unsecured. This means that you don’t need to offer any collateral for your personal loan. Many banks offer personal loans to their customers. In some cases, as with Clydesdale Bank personal loans, the rates can be rather attractive for a customer in good standing with good credit.

You can usually get a personal loan as an installment or a line of credit. An installment loan is paid back, according to certain terms, over a set period of time. On the other hand, a personal line of credit is a lot like a credit card: You have a limit, and you can continue to access the line of credit as long as you keep paying down what you owe.

I have a personal line of credit amounting to $14,000, and the interest rate is much lower than what I would pay if I had a credit card. While I don’t like to use the line of credit regularly, it serves as overdraft protection on my checking account (in the event that cash flow issues result from my irregular income), and is available in the event that I need access to funds quickly.

You can usually use unsecured loans for any purpose. You don’t have to specify what the funds will be used for when you apply, and this can provide you with flexibility in your spending.

How to Apply for an Unsecured Personal Loan

In most cases, all you need to do to apply for an unsecured personal loan is to go into your bank and ask how you can get access to a loan or a line of credit. The bank will look at your accounts, as well as check your credit. If you have good credit, and if you are a customer in good standing, you will be eligible for a higher loan amount, as well as a lower interest rate.

Many banks will lend between $2,000 and $15,000 as a personal loan, depending on your qualifications. In some cases, you can even borrow much more.

Make sure you have all of your information available when you apply for your personal loan. You will need information on your income, as well as your Social Security number, name, birthdate, and address. Understand, too, that if you have a co-signer, you will need him or her to provide information as well.

Once you are approved for your personal loan, you will receive the funds. Many banks simple deposit them into your checking account, but you can also ask for cash. With a line of credit, it will show up as another account. You can easily transfer money into your checking or savings account, and many banks provide you with a card you can use to access the line of credit while you are away from home.