Personal Loans

It always pays to shop for a loan.

Most banks and other financial institutions offer a variety of loans to consumers. Home mortgages and auto loans are probably the most commonly offered loans of this type. However, it's also possible to obtain loans for home improvements, remodeling, medical bills, college and technical school tuition, and other items consumers may need to finance.

As with credit card rates, loans offered by financial institutions can vary greatly in terms of interest rates and payment schedules. It pays to shop around among several institutions when applying for a personal loan. Keep in mind, however, that many financial institutions do charge a loan application fee, so find out first what that fee will be.

In some cases, a lender may require a co-signer (in legal terms, a guarantor), someone who agrees to assume responsibility for repaying the loan if the borrower fail to make the required payments. If you are ever asked to co-sign a loan for a friend or relative, you should carefully consider the responsibilities you will be assuming if you agree to do so. In many states, a lender may seek repayment in full from a co-signer upon a single late payment from the original borrower. You might also want to consider that the lender probably wouldn't require a co-signer if the borrower's credit record was a good one, so you may want to think long and hard before taking on the risk involved in co-signing a loan.

If you still decide to act as a co-signer, FTC regulations and the law in most states require the lender to provide you with a copy of the underlying loan agreement which you are agreeing to guarantee payment of, and a separate document which explains your rights and obligations as the co-signer. A lender who fails to provide you with these documents may be unable to obtain repayment from you if the borrower defaults.