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Personal Loans: What You Need to Know

Posted on September 29, 2010
Filed Under Personal Loan | Leave a Comment

We all know about long-term loans. Mortgage loans. Car loans. But what about when you just need to get a loan for a few weeks or months, to cover some unexpected expenses? Credit cards are the obvious answer, but strangely enough, despite the best efforts of the industry, not everyone owns a credit card! What are your other options?

Low cost personal loans, available from your local bank,  are something that surprisingly few people consider. While they’re a little more trouble than using a credit card, they’ll offer lower interest rates and depend partially on your personal relationship with the bank, rather than entirely on your credit rating. Some banks actually specialize in this type of loan; for example, Barclays LTD, one of the largest banks in the world (actually, one of the largest companies in the world) puts a lot of effort into telling customers how they can get a Barclays loan.  Banks like these loans because they’re lending to people they already have a relationship with, so they consider them to be low-risk;  while short-term loans have lower interest rates than long-term loans, they allow the bank to earn interest on deposits without tying up their money, allowing them to quickly react to changing conditions.

Of course, just because these loans depend on your relationship with the bank doesn’t mean that your credit score no longer matters! If you have a history of being late with your payments, it’s unlikely that anyone will be in a hurry to lend to you,  no matter how long you’ve been banking with them. Additionally, it does help if you can show that you have some source of income so you’ll be able to make the payments for your personal loan on time without needing to depend on, say, a well-timed lottery ticket…

In short, if you’ve been banking at the same place for a while and need some quick cash, a personal loan could be just what the doctor ordered.

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