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An
unsecured loan is money you borrow without having to
provide to the lender something of value like a home,
car or other valuable which they can claim if you do not
pay back your loan. Unsecured loans are also sometimes
called personal loans or installment loans.
When you take out an unsecured loan, the interest rate,
monthly payment and number of payments required to repay
the loan are usually fixed and will not change during
the term of the loan. You receive a check for the entire
amount you are borrowing when your loan is approved.
Before taking out an unsecured loan, it’s wise to
compare interest rates, fees and terms from a number of
lenders. When comparing loans, consider these factors:
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Interest rate
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Length of loan
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Monthly payment
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Total interest you pay over the life of the loan
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Whether there are any early pay-off penalty fees
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Additional fees, such as loan origination fees, late
fees, etc.
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When late fees will be assessed
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What payment methods the lender offers (online
payments, payment by check or direct debit)
Shopping around can help you save money in both the
short and long term. Don’t just consider the monthly
payment. Look at the big picture and find out how much
you will have paid out when the loan is completely
repaid. Another way to save on your interest costs is to
choose a shorter length of time for the loan. |
