Personal loans are a necessary evil sometimes. They provide needed funds to cover an unexpected expense, provide the ability to consolidate debt and help you make major purchases. If used improperly they can put you into a world of hurt. If you have a decent credit score, you have a number of options to take out a personal loan, some of which could be a better deal than your local bank.
Peer to Peer Lending
Prosper.com and Lending Club are two peer to peer lending services which allows their users to borrow and lend money to each other. To take out a loan on either site ,you must be a U.S. resident and have a credit score of at least 660. Excluding your mortgage, student loans and auto loan, you must have a debt to income ratio of less than 25%. Lending Club says that their average borrowers pay just 9% on their loans.
If you need a short term loan, a credit card might be a great short term option. Often you can get a great introductory rate which is usually good for 6 months to a year. In the hay-day of no interest offers, borrowers could easily get 0% APR for a year. This deal might be harder to get than before, but you can still find a great deal if you look around. Make sure that the cash advance rate also qualifies for the low introductory rate, so do your homework first.
Banks and Credit Unions
Personal loan rates can be relatively high if you just walk into a bank and ask for a loan. You can reduce the rate that you would pay at a bank by working with a financial institution that you have an existing relationship with. Credit unions typically offer better rates than banks and if you can provide some sort of collateral, such as the title to your car, you will also receive a much lower rate.
