Personal Loans: What Are They and How to Get Them?


A personal loan is a type of installment loan that offers access to cash, especially at times when need of funds for your education, home improvement, and many more. These loans are paid at a fixed rate, fixed installment period, and a fixed amount to pay per month. 

Most personal loans are unsecured, meaning you don’t need to pledge your house or car as your collateral. However, other personal loans are secured. Are you wondering which kind of personal loan fits your current financial needs best? Read below to know what type of personal loan is perfect for you and how to get them.

Types of Personal Loans


  • Unsecured personal loan


This is the most common type of personal loan. As mentioned earlier, you won’t need to use your legal property as collateral. What is typically required is a higher credit score, unlike in secured loans (we’ll talk more about this later). 

Some lenders allow borrowers to have a low credit score, as long as there is a consigner who will be legally liable to the lender upon default. This default will occur if the credit was not paid upon due date or demand.


  • Secured personal loan


Mortgage and car loans are two examples of secured personal loans. As introduced earlier, the borrower will have to pledge an asset as collateral to the personal loan. The collateral ensures the lender that the borrower will pay the amount loaned based on their installment terms. In this case, if the borrower fails to pay his or her loan, the lender will seize the pledged asset.  

The loan application of secured personal loans is usually more efficient than the unsecured personal loans, thanks to the borrower’s pledged collateral/s. Secured personal loans, however, have higher interest. Another risk of a secured personal loan is  your pledged collateral will be taken away from you if you fail to pay the credit upon due date or demand. 


  • Fixed-rate loan


As its name implies, fixed-rate loans have a fixed interest rate charged on loan and fixed monthly payment, regardless of the length of the installment period. It is best to obtain a loan at a time when the interest rate is low. 


  • Variable-rate personal loan


Variable-rate loans are the opposite of fixed-rate loans. Here, the interest rate charged on the loan changes following the market interest rate. Consequently, the amount of your monthly payment also changes. 


  • Debt consolidation loan


In this loan, all personal loans are consolidated into one single loan. Payment is favorable to the borrower because of the lower interest rate, lower monthly payment, or both. This is economical if the borrower has multiple credit card loans or student loans. 

In a debt consolidation loan, payment is once a month. Plus, you don’t need to receive many calls and letters in a month. However, debt consolidation can hurt your credit score and extends your loan term. Be aware that consolidating your loans will not get you out of debt, but only combined to only pay one single loan. 

Steps to getting a personal loan


  • Check your credit score.


A credit score shows how well you paid for the last loan you obtained and how likely you will pay in your future loans. Having a good credit score will increase your chances of qualifying for a personal loan. 

Credit lenders have different ways to gauge the credit score. But generally, credit scores are rated as follows:

  • 720 and higher: Excellent credit
  • 690-719: Good credit
  • 630-689: Fair or average credit
  • 300-629: Bad credit


  • Compare loan companies and rates


Look for the perfect lending company with the best interest rate and loan terms, depending on your needs and capability to pay. Some think that only companies with low-interest rates are the best ones. But, you also have to take into consideration other features, like hidden charges and fast approval. 

There are also credit companies that have different services and ways of dealing with clients. Take CreditNinja personal loans, for instance. They offer safer and affordable personal loans. What’s more, they approve applications way more efficient than other lenders.


  • Check your lender’s requirements.


Lenders have different requirements, depending on the amount of money you are going to borrow. Usually, companies will ask you for your social security number, proof of income, monthly debt obligations, birthday, address, and other personal information. 


  • Read terms and conditions.


Read the terms and conditions before applying for a loan. The interest rate might be low, but there are instances that additional payments occur before you receive the cash you loaned. There is also a risk of having surprise demands and fees if you do not read the fine print. 


  • Apply for approval


Once you’ve collected your requirements, then you’ll be ready to submit them. After submission, the lender will have a thorough background check. Approval usually takes a week. Alternatively, other lenders, such as CreditNinja personal loans, only take one business day before approving your loan application.

Submitting requirements doesn’t mean, however, that your loan application will be approved. Some of the reasons for denied loan applications are low income, low credit score, high debt-to-income ratio, and too many credit applications.


Taking out a personal loan will help you relieve other debts, pay for college fees, or purchase a car. But, always be wary of fluctuating interest rates and different payment periods. Make sure you have high credit scores before obtaining a personal loan.