The Three Factors of Personal Loans
If you are short on money, a private loan (also known as consumer loan or personal loan) could be an option. But there are a couple of things you should know, before you are raising a loan. Learn about concepts like security, interest rates and loan charges.
So what is a consumer loan? A consumer loan is a loan taken by an individual. Normally the loans are raised to pay for some kind of buying expense (like a television or a vacation). But it can also be relevant to take a loan to pay other debt. If you raise a loan for a house, it is called a mortgage loan (and cannot be compared to a personal loan).
The private loan will normally be raised from banks or individual lenders. It will often be paid back after half a year to five years; compared to the mortgage loans 20 to 30 years payback time.
The cheapest kinds of loans are secured loans. Because the lender has security in some kind of asset (like a house or a car) they do not have to take a big risk. If you fail to pay your loan, your debt will be settles against the security asset; and your risk losing your house or car.
The opposite is an unsecured loan. Here you do not supply any kind of security asset. If you fail to pay your debt, the lender cannot take your house or car. This risk makes the price of the loan higher. And if you are unemployed or have a bad credit history, it can be difficult and very expensive for you to raise an unsecured loan.
Before rising a loan, must look at the interest rate. It is a good idea to compare the rates on the internet. You can also ask more than one bank to get the best rate. You can save a lot of money this way.
The interest rate do also depend upon how much you like to borrow and how long time you need to pay the amount back. So you have to clarify your needs to find out for how long time, you need the loan; if it is too short, if can get in trouble find the money, but if it is too long, you will pay too much in interests.
But the rate is not the only thing to decide the price of your loan. The other factor is the charge to raise the loan. Often will it be the same no matter if you are borrowing $1,000 or $10,000. So many small loans can be very expensive in the long run.
Filed under Secured Loans by 
Comments on The Three Factors of Personal Loans
To Alina – "Alina" is prettier.To Bob G – From a 2007 article – you may want to check out. "How Federal Regulators, Lenders, and Wall Street Created America’s Housing Crisis — Nine Proposals for a Long-Term Recovery"by Mike Larson 07-19-07Thehe author defines some terms you may you may want to research yourself. (See Below) From me – "Nonaccrual" basically relates to charge-off. Companies cannot continue to accrue interest after charge-off (but a debt buyer can claim you own it – problem with deficiency judgments..1) Past due loans – loans with payments past due by 90 days or more2) Nonaccrual loans – loans for which the institution no longer expects to receive interest payments.3) Nonperforming loans – the sum of past due loans and nonaccrual loans4) Charge-offs – the write-down of a nonperforming loan. The loan balance (plus foreclosure expenses) is charged against the institution’s loan loss reserve.5) Recoveries – the collection of payment or proceeds of liquidated collateral on a loan previously charged-off. Recoveries are usually credited against the loan loss reserve.6) Net Charge-Offs – charge-offs, less recoveries.AlsoTable #5: 20 Banks with the Most mortgage loan charge-offsBankStateTotal Assets($1,000s)NetCharge-Offs of Total Mortgages($1,000s)Street.com RatingCitibank NANV1,076,949,000111,000B-JPMorgan Chase Bk NAOH1,224,104,00090,000C+National City BkOH131,741,50879,907C+Wells Fargo Bk NASD396,847,00073,000C+SunTrust BkGA184,810,39427,572B-Wachovia Bk NANC518,753,00027,000BUSBk NAOH219,825,07026,037B-Bank ofAmericaNANC1,204,471,77322,101B-Fifth Third BkMI47,845,70116,060B+HSBC BkUSANADE169,010,16813,269CFifth Third BkOH51,561,15312,527B+Regions BankAL133,224,3099,898BCharter One Bank, NAOH45,954,9508,822C+Branch Bkg&TCNC118,083,2297,921BKeybank NAOH89,408,2007,462B-PNC Bk NAPA90,405,0306,465BWells Fargo Financial BkSD4,225,7516,350C+First Tennessee Bk NATN38,522,6576,159B-Irwin Union BkIN5,431,2595,928C-Huntington NB OH34,489,7605,618C
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Since credit ratings follow you for seven years, learning how credit ratings work can be a great help in not getting yourself in deep trouble.
On time payments is the best way of keeping a good score. The rest is secondary.
If you must use credit, try to be picky where you use it. The credit agencies watch this. Don't buy groceries or gas. Student loans, car loans and mortgages is where your debt should be. If you are truly hurting for cash flow, the type of secured loan associated with second mortgages is second tier, but less frowned upon.
Total balance is also a major warning sign to ratings agencies, even a great record of on-time payments is not enough.