What is a Personal Loan?

With a personal loan, you the consumer are borrowing a set amount of funds that is paid back within a set period of time (i.e. it has a set amortization period). A personal loan can literally be used for anything nowadays (many lenders even give out “vacation loans”), although the bank will likely want to know what you plan to use the loan for regardless.

Are Personal Loans Good Options for Debt Relief?

Personal loans are good for certain things but they really can't compare to a debt relief program or a similar option which has the main goal of getting consumers out of debt in a quick fashion. However, they can help consumes consolidate with a lower interest rate if they qualify for one.

Negatives of Personal Loans

There are a few issues that consumers typically have with personal loans

• Not qualifying for the full amount they need
• Having too high of a monthly payment
• Having too high of an interest rate
• Having a high origination fee

Are Personal Loans a Viable Option?

Personal loans have their uses but they tend to be one of the riskier loan options in the marketplace. They aren't secured to any assets and due to this, they often have very high associated costs. The cost of capital can often exceed the benefit, but if someone is in need of an unsecured loan and their credit permits it, they can and should consider a personal loan as a viable option.