For individuals with good credit, personal bank loans offer a lower interest rate than rates available through credit cards, according to Lita Epstein for DailyFinance. Personal loans are available as secured or unsecured loans. For individuals with poor credit, personal loans are generally not available through banks.
Because interest rates are lower with a personal loan, the borrower may find it beneficial to pay off higher interest credit cards. Other uses, explains Epstein, include education, home improvement or vacations. However, Forbes indicates that in the application process for a personal bank loan, the borrower should be prepared to share the purpose of the loan with the lending officer.
Borrowers should do some homework before applying for the loan, according to Forbes. Banks are usually willing to share the range of credit scores they require for the loan. Borrowers should review their credit report several weeks before making a loan application. If there are inaccuracies in the report, the borrower should correct those inaccuracies before applying for a loan. A single error on a credit report becomes costly over the life of a loan.
While larger loans and lower interest rates are available with secured personal loans, the collateral is at risk. Epstein warns borrowers to tread lightly before putting their home, vehicle or other property at risk.