A personal loan is generally made for smaller amounts and is most often offered on an unsecured basis. This means the borrower is not required to present collateral / security in order to obtain financing. The approval of unsecured loans is typically based upon the borrower's credit history and ability to make payments, as determined by such factors as job stability and debt to income ratio (monthly payments as a percentage of gross income). Because of this, they are also often referred to as signature loans, because all you have to do is sign the documents. This may sound great, but because of their increased risk to the lender, they are most often financed at higher interest rates. In some cases, these loans are secured to assets, such as a vehicle, but this form of financing is not nearly as common as it once was.

If you are looking at this type of lending as a way to consolidate debt, please be sure to examine all of your options. Other sections on the Debt Consolidation Loan Directory list of companies and services that you may want to review and compare:

• Non-Profit Credit Counseling Services - Review web site listings for non-profit credit counseling companies from the Open Directory Project (ODP - http://www.dmoz.org).
• Debt Consolidation - Are your bills piling up? Lower your monthly payments and consolidate them with a debt consolidation loan or a related service.
• Debt Management Company Listings - Too many credit cards and other bills to make monthly payments on? Start here by reviewing and comparing different debt management options for getting help with your credit card bills and other monthly obligations.
• Debt Consolidation Companies - Company listings from the Open Directory Project that offer credit card consolidations, debt counseling services and consolidation loans to consumers, students and businesses.

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Additional Information:

Unsecured lending takes a couple of main forms, based upon the borrower's needs: traditional personal loan financing and credit cards. While traditional personal loans have been around much longer, they have been largely replaced by the credit card, which lenders find far easier to sell, package and market to the public (thereby making them much more lucrative... and dangerous for irresponsible users). You can now find a credit card for almost any need: retail / store, gas, pre-paid, secured, and incentive cards (examples: frequent flyer miles and cash back programs).

Personal or signature loan financing is not as prevalent as it once was due to the fact that it has a sales cost to the financial institution or lender and is more difficult to package using computerized underwriting programs. However, this directory does feature several advertisers that offer this type of financing, or you can apply for one at a bank (visit the bank directory for listings of local banks). A few key things to note: 1) These loans are generally paid out in a single lump sum; 2) They usually have a fixed monthly payment and term, unlike a credit card; 3) And finally, as mentioned, they are charged at a higher rate of interest than the common forms of secured loans, such as mortgages and home equity loans.

TIP / WARNING: Using a personal loan company for debt consolidation will do absolutely no good if you think the resulting lower payments will give you the right to go out and run back up your debts by shopping. If you do, you will only become worse off than you are now. Here is a better idea: Open a savings account and put a portion of your check into it each payday. Many banks also offer auto-withdrawal services and are perfectly willing to do this for you. If you cannot force yourself into a schedule of saving on a regular basis, let them help you. Then, when an emergency arises, or that "gotta have it" purchase comes along, stow the charge card. Use your savings!

Looking for debt solutions, personal loans or credit counseling in a particular state?

Browse the Debt Consolidation Loan Directory by state

• Comparison Shop for Loans - Tip from the FDIC that reminds you examine both the total dollar or interest costs and the APR (annual percentage rate) when evaluating offers on loans.
• What Type of Credit do You Need? - Consumer credit is financing to purchase goods and/or services for personal, family, or household use. Or, it may be used to consolidate debt you already owe. But, what type of financing do you need: a revolving credit line, an installment loan or a consumer lease?
• Remember to Review Your Credit Report - Many consumers neglect to take a look at their credit report or credit scores until going to apply for or until after being denied for a loan.
• Basic Tips for Managing Money - Credit Solutions offers the following tips and information to give you ideas on how to control your spending, to manage your budget and to save money.

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