As the economy has worsened, more and more Americans have turned to private personal loans. Some of these people are searching for a loan to take care of a financial emergency. Others, though, are in good financial shape but would rather deal with a private lender as opposed to a bank.
The Ins and Outs of Personal Loans
It is essential to learn the ins and outs of private personal loans before deciding that this is best for you and your current financial situation.
The word “private” in this case means that you are borrowing money from a private lender, not a bank, credit union, or some other type of financial institution.
A “personal loan” is one that you can do with what you please as it does not have any specified terms. This is in contrast to other types of loans, such as a mortgage, for example, in which the money is meant for purchasing real estate.
Personal loans are used for a variety of reasons ranging from home repairs to paying for college to dealing with unexpected medical expenses. How you use the money is your decision.
Benefits of a Private Personal Loan
- Shorter application. There is nothing worse than applying for a bank loan. The application process is long and drawn out. On top of this, you have to deal with a loan representative who is not always as helpful as they could be.
- Your credit does not matter as much as it would with a bank loan. This is why so many people with bad credit turn to private personal loans instead of a more traditional loan from a financial institution.
- Quick decision process. Did you know that it can take a bank several weeks to make a decision on your loan? Do you have this much time to wait? Even if you do, nobody wants to sit around wondering what is going on. With a private personal loan you will get an answer in a hurry. Even better, you can have the money in your hands soon enough.
Note: private personal loans often times have a very high interest rate.
In an overall sense, bank loans will always be more popular than private personal loans. However, this does not mean that dealing with a bank is best for you. With many benefits, some of which are detailed above, there are reasons why a private personal loan may be a better choice.
Chris Fuller went to the University of South Florida and has worked in the financial sector for over 20 years. He has extensive experience in all aspects of personal and small business lending, from personal loans, equipment finance to cash flow based solutions for small mom and pop businesses, and large corporations.