Making personal loans work for you: Types, considerations and best practices

Unsecured loans don’t require collateral, making them accessible to many borrowers. Lenders assume a greater risk, so the interest rates are typically higher than secured loans. Approval time can be immediate, and some restrictions on uses may apply. Collateral, like a home, car, or savings account, is required to secure these loans. They often have lower interest rates due to reduced risk for the lender. Keep in mind that lenders can seize the property used for collateral if you cannot repay the loan. These loans simplify repayment and may reduce payments by combining multiple debts into one loan. These loans help individuals manage debt more effectively, often providing lower interest rates than credit cards. Joint or consigned loans involve two or more people responsible for repaying a loan. They are often used when one borrower’s creditworthiness or income alone may not be sufficient to secure favorable terms. All parties are equally responsible for the debt, sharing both the benefits and risks. For cosigned loans, a secondary individual with a stronger financial profile supports the primary borrower, acting as a guarantor for the loan. BNPL loans are a contemporary financing option that allows consumers to make purchases and defer payments over...