Personal Loans

How Personal Loans Measure Up Against Old-School Bank Loans

When you are in dire financial straits or need funds for a large purchase, there are usually several options at hand. First, there are family and friends who could be asked for money. Secondly, there are banks with their conventional forms of credit. And thirdly, there are online-based lenders providing so-called personal loans.  While asking friends for help brings embarrassment and possible souring of relationships, impersonal institutions look like a better option. But should you take out an old-school loan, such as a mortgage, or opt for modern alternatives? Here is a comparison between the two.  Who can apply Personal credit is undeniably easier to obtain due to more lenient requirements for qualifying. Banks not only check an applicant’s credit score, their income and background, they also ask for collateral. This means that if you fall back on your payments, the lender will seize your property (vehicle, home, etc.) that serves as a guarantee of repayment.  Personal loan providers, on the other hand, will focus on just your income and credit history. Collateral is not always required. Moreover, the credit score they accept as the threshold is often lower. This means that if your relationship with borrowed money was turbulent…