Apollo Beach, FL (PRWEB) April 10, 2013
by Jason Brick
The trouble with personal loans is that, though they can be a useful tool, not everybody offering one has your best interests at heart. You have to understand personal loans before you consider, let alone apply for, one. Loan resource CreditLoan.com has released an infographic that plainly describes the good, the bad and the ugly of this type of personal debt.
Here's what the graphic shows:
Applying for a personal loan can help you consolidate debt into easier payments, afford needed home repairs or replace an ailing car. When filling out the application, avoid common mistakes that can lead to rejection.
-Be clear and specific when filling in the subject line of the application.
-Avoid mentioning personal details that might indicate you're a poor risk — such as needing the money to pay for mental health problems, or that your parents wouldn't cosign.
-Don't give information that reflects a bad financial situation, or that you'll continue bad spending habits after receiving the loan.
-Never say you're taking out a personal loan to make a down payment without providing a clear plan for how you'll pay the rest of the debt.
Secured personal loans (usually using home equity as collateral) are a less expensive option for borrowers because they pose less risk to the lender. According to data reported on CreditLoan's graphic, the average family has tripled the amount they've borrowed against their homes over the past 13 years. However, the percentage of family debt represented by home-secured loans has remained stable. This means families are borrowing much more, and risking their homes to do it.
That risk, reports CreditLoan, has resulted in the rate of personal bankruptcies doubling over the past 10 years. With 43 percent of American families reporting that they spend more than they earn each year, that figure may riser even further as the economy continues to adjust.
CreditLoan has been a leading resource for consumer information regarding personal finance for nearly 15 years. Striving to publish only the most current, accurate and insightful information helps ensure the quality of our content.