Borrowers can use high risk personal loans to consolidate high-interest credit card debt in order to attenuate interest payments and expedite debt repayment, explains NerdWallet. In addition, personal loans do not require collateral. However, personal loan lenders tend to demand more information, which can be problematic for the deeply private, and take several days to approve loan applications, which disadvantages borrowers with an immediate need for cash.Continue Reading
Because personal loans are not backed by any collateral, lenders consider them very risky and demand high interest rates as a result, explains NerdWallet. For this reason, personal loans have much higher interest rates than mortgages or auto loans. Despite this, personal loan lenders offer far better terms than payday loan lenders, even to borrowers with poor credit.
Because of the high interest rates that lenders levy on personal loans, borrowers with good credit and ability to pay off a loan in 12 to 18 months should consider applying for credit cards offering a 0 percent interest rate on purchases for a year or more, advises NerdWallet. Homeowners should consider home equity loans as these attract significantly lower interest rates than personal loans. Borrowers who have solid credit and are in good standing with their bank should consider applying for a loan there or at a local credit union, as they are more likely to get a better deal that way.Learn more about Personal Loans