The benefit of a personal loan is that they are unsecured. This means that you are not required to provide collateral such as your home or car. The lender then has nothing that they can take should you default on your payments – aside from your reputation. The downside is that you will pay a higher interest rate because of this.
While personal loans are a more viable option than payday loans and overdrafts, it’s essential you find the right lender. Make sure you compare rates and take a close look at the terms of a lender’s agreement. For example, some lenders will charge a ‘prepayment penalty’ or ‘exit fee’ if you pay off your loan early. Check in the terms that no such fee will be charged, or factor this potential cost into your comparisons.
You’ll also want to have a good credit history to get the best deal on your personal loan. If your credit history isn’t in the best of shape, one option to boost your credit worthiness is to have someone with good credit co-sign with you.
If you do go down this road, make sure you both understand the responsibilities involved and how failing to make loan repayments could affect both your credit histories in the future.
Source:http://www.nerdwallet.com/blog/finance/2013/cheap-personal-loans/
