When To Opt For An Unsecured Loan

2007-03-08 10:33:40

( Financial )



Sometimes you just need a little extra cash to have a fix done on your car, or to buy a newer household appliance like a television set or a new DVD player. Before you rush out and take up a bank’s promotion on a personal unsecured loan, make sure you read the fine print and do your research.

More and more people prefer short-term unsecured loans. It is a growing market. However, banks still prefer offering their credit card products as these offer higher interest rates compared to secured loan rates and can guarantee a long relationship with their customers.

First and foremost, do your research. Look at rates offered over the internet by several banks for unsecured loans. Determine the minimum amount that you really need to borrow. Read the terms attached to your personal loan. Make sure you understand the terms. If something is unclear, have your lending officer explain.

Second, look at the amount you are borrowing and determine if you can afford the monthly payments. Look for hidden charges. Make sure you understand each charge and why it is there. Disregard any verbal promises from anyone from your bank and concentrate on your contract. It is only the contract that counts. Once you sign the contract, verbal promises go out the window.

Be wary of bank officers that talk you into getting a higher loan amount than what you have originally decided on. These officers may be operating on a commission-based loan. Keep in mind that bigger is not always better.

Third, make sure your rates are fixed. It may sound like one of the best secured loans you have gotten, but the interest rates may significantly increase a couple of years from now. Make sure you choose a specific amount for your loan with specific fixed rates during a specific fixed amount of time.


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