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Unsecured vs. Secured Loan Types

The two groupings that most loan types fall under include secured and unsecured loans. Secured loans are protected by collateral, which is something assured as a backup for loan repayment, should you ever default on your scheduled loan payment. These assets vary from stocks, personal property and bonds, but the most common include a car title or deed to a home. An unsecured personal loan credit is the opposite of secured. It’s one that does not require any assets or property to be held as collateral, but the interest rates for this type of loan are much higher, usually 20% and above. These two categories of loan types are important to know when applying for a personal loan credit.

What You Need to Apply

There will be several general things you will need to have before applying for a personal loan credit. The timeliness of your application is vital, so having these items on hand before applying will be beneficial to you. The documents you’ll need include the following: a form of identification, proof of income, and verification of home address. These documents are typically standard, but you may be required to provide other items in addition, such as employer name, your email address and phone number, and Social Security number. You should always check your credit score and try to improve it if necessary before applying. Making sure you are fully prepared before applying will allow you to have a greater chance of your application being approved.

Questions You Should Ask

Being able to fully comprehend all of the details, fine print, and stipulations of your personal loan credit is vital to your financial health. Here are some questions you should ask and be sure to know in order to stay on top of payments and the rules of your loan.

Are there limits on how you can use the money?

Most lenders don’t care what you spend your loan money on, just as long as you pay it back in full on time. Although, some lenders do care and there could be penalties for not spending your loan money on what you said you would. Make sure you know ahead of time. 

Are there any payment penalties?

Loan payment penalties come in all shapes and sizes, from late payment, overdraft, to pre-payment penalties. Before you take out a personal loan credit, you should determine what your lender’s policies are on these types of penalties so you can plan accordingly.

These 3 tips about personal loan credit should guide you while applying for a personal loan. Whatever your personal need is, My Pensacola Credit Union offers great personal loans with affordable rates.

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