Saturday, January 19, 2008

Refurnish Your Home With A Personal Loan!

Most people resort to credit cards to finance such projects; yet, a personal loan can be a lot cheaper and can help you not to exceed yourself in your expenses. Moreover, there are always delivery charges and if the piece of furniture is big enough not to fit through the door, you’ll need some guys to introduce it through windows or dismantle it and put it together again. All of this costs a lot of money and you need to add it to the overall costs of the refurnish project. Why Personal Loans? There are many reasons why a personal loan is the best choice for you. For starters, since personal loans come in fixed amounts, this will force you to budget your finance needs and know beforehand how much money it will cost you to refurnish your home. Thus, you’ll avoid going on board a project that you are not sure how much it will cost. Secondly, the interest rate charged for personal loans is a lot higher that the rate charged for credit card financing. Even unsecured personal loans carry lower rates than credit cards. If you are lucky enough to have equity on your home, you can request a home equity loan and you’ll be able to get finance at a much lower rate. Finally, fixed payments will help you budget your debt repayment and thus divide among the months a project that might be quite expensive. With credit cards, when you make big purchases, the minimum balance payment tends to escalate to high amounts that may not be easily afforded. Different Types of Loans Personal loans come in many forms. There are secured and unsecured personal loans, fixed rate and variable rate personal loans, personal loans for people with bad credit , pre-approved personal loans, pre-qualified personal loans, etc. All share the same concept: They are loans meant for personal purposes that may carry high amounts but never as high as home loans. The presence or absence of collateral determines whether a personal loan is secured or unsecured. Collateral is a security (an asset) that guarantees repayment of the loan thus reducing the risk involved in the financial transaction for the lender. That’s the reason why secured personal loans carry such low interest rates compared with unsecured personal loans. As regards the interest rate, a fixed rate remains the same over the whole life of the loan. This implies that the monthly payments of the loan will also remain the same which makes them an excellent tool for those not familiar with the lending market and not familiar with budgeting variable rate debts. Variable rate personal loans change the interest rate every three months. The interest rate can rise, lower or stay the same according to market conditions. Thus, the monthly payments will vary consequently. However, at the same time, variable interest rates are initially lower than fixed rates (mainly because the risk for the lender is also reduced by the possibility to alter the interest rate). --- Jessica Peterson writes finance articles for where she shares her knowledge about how to get money for a starting-up business, consolidating any kind of debt, repairing a home even with a bad credit history and more.

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