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Personal Loan Tips

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Personal Loan Tips
A personal loan is a loan made by the lender to an individual and is normally of two broad types: a secured personal loan and an unsecured personal loan.

A secured personal loan is normally a loan that is guaranteed by the pledge of some asset or collateral on the part of the borrower. Given the presence of some collateral, the lender’s risk is reduced significantly and often translates into favorable loan terms for the borrower. An unsecured personal loan, on the other hand, is not guaranteed by the pledge of any asset and is often faster and easier to obtain due to the absence of documentation requirements.

Here are some personal loan tips that you may want to consider
Clean your credit
 There are three major credit bureaus—Equifax, Transunion, and Experian. Contact these bureaus to obtain your credit report and verify the accuracy and authenticity of the information. If there is an error, bring it to their attention immediately. Remember, the stronger your credit, the better your chances of obtaining a low cost personal loan.

In many cases the personal loan’s terms are inversely proportional to your credit standing. I.e., the higher your credit score, the better your chances of obtain a low cost mortgage loan. Take steps to improve your credit standing by paying off balances, making timely payments, consolidating debt, correcting errors, and taking a series of other credit-enhancing measures.

Demonstrate your financial standing
A lender’s risk is reduced even further if your income is strong and if you demonstrate a sound ability (and history) to repay the loan.

Prepare and demonstrate documentation
Keep all your documents ready—W2s, tax statements, paystubs, asset documents, investment documents, stock certificates, bank statements, and other documents providing details about your financial ability.

Compare options
There are various lenders available in the market and each would have their own criteria and loan terms. Make a detailed comparison of the different lenders to find one that best matches your needs.

Read the fine print with a toothcomb
Remember, the fine print is prepared to the lender’s advantage so it is in your best interest to read and understand these terms thoroughly.

by wahab
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