Texas personal loans can give you some breathing room when you’re facing a financial emergency.

This state may be a land of opportunity, but there are reasons people need fast cash every day.

A crash on U.S. 83, a work accident at the Port of Houston, or an emergency as simple as a layoff could leave you with surprise transportation, medical, or property bills.

Make no mistake, taking out a loan is a serious decision.

You should do as much research as possible, and make sure all of your questions are answered before you sign any papers.

You’ll learn how personal loans are different from other loans, and what types of loans are available (including bad credit personal loans in Texas).

This guide will help you understand personal loans specific to borrowing in the state of Texas.

What you’ll learn:

• What is a personal loan?
• Types of personal loans in Texas
• 5 Questions you should ask yourself before taking out a personal loan in Texas

First, let's quickly review some of the basics of a personal loan.

What is a personal loan?

A personal loan is a loan to an individual or couple that can be freely used and is paid back in installments.

Personal loans may be used for a variety of different purposes.

These loans often have no restrictions on how they can be used unlike, for example, home loans.

The flexibility makes these loans widely used. For example, many commuters in major metro areas such as Dallas, Austin, and San Antonio rely on personal vehicles for transportation.

A personal loan can be used flexibly to get a rental car or to make a downpayment on a new vehicle.

Borrowers use personal loans to:

• Pay off smaller higher-interest lines of credit (for example credit cards) or close debts as a debt consolidation strategy
• Cover the costs of celebrations (weddings, births, etc.)
• Get through short-term events such as a work relocation, home improvements, and others that cause unexpected expenses
• Pay for unexpected medical expenses

While the flexibility makes them similar to credit cards, there are some important differences. For example, personal loans are always taken out at a fixed amount. The date the loan is to be repaid is also set in advance.

Types of personal loans in Texas

There are many types of Texas personal loans that may be available to you depending on your needs, and personal credit. You will need credit approval to apply for most of these personal loans. These loans can come with competitive rates, especially when market rates are low.

The list below covers some of the most common options that may be available for Texas borrowers.

Secured personal loans

Secured loans are loans that have been backed by collateral (such as how home equity loans are backed by the deed to home). Collateral refers to any property that a debtor is entitled to seize if the loan goes into default. Cash accounts, property deeds, and other valuables may be used to secure a loan.

You may be able to take out larger loan amounts when they’re secured. However, you will often need to produce collateral that has more value than the loan that you are taking out. Even with great collateral, you may only be offered these loans by banks, credit unions, and other financial institutions if you have a history with them.

Unsecured personal loans

An unsecured loan is a loan that is not backed by any collateral. Most personal loans that are available in Texas are unsecured.

The lack of collateral means that your creditworthiness will often play an outsize role in qualifying you for the loan, or giving you access to better loan terms. If you have a good credit score, you may qualify for a higher minimum loan amount, low interest, lower monthly payments, and other favorable repayment terms.

Fixed-rate personal loans

A fixed-rate personal loan is an agreement that ensures the interest rate won’t change during the life of the loan. Your personal loan rates will be determined by the market interest rate at the time the loan is signed.

Choosing a fixed rate means that you can more accurately predict the total amount of loan payments and interest. If rates go up, you're protected by being locked into a lower rate. If rates do go down, you can refinance at the lower rate.

Variable-rate personal loans

Variable-rate loans are loans that permit the rate to adjust to the market interest rate. The rate may change monthly, quarterly, or annually, depending on the conditions of your loan agreement.

Neither a fixed interest rate nor a variable interest rate is necessarily a better deal for borrowers. If interest rates drop during the loan, a variable rate gives you access to a better rate without refinancing.

However, if the price goes up, you may be forced to pay more for your loan than it cost at the time of signing.

Co-signed personal loans

A co-signed personal loan involves both a borrower and another signer (the co-signer). The cosigner takes responsibility for the personal loan if the original borrower defaults.

If you can’t qualify for bad credit personal loans in Texas, you may still be able to get a loan if you work with a cosigner. Your co-signer's credit history will be considered alongside yours, and you may be able to access low rates you couldn't qualify for alone.

 

5 Questions you should ask yourself before taking out a personal loan in Texas

• How much do I really need to borrow?    Plan your loan by adding invoices and other data together. Borrowing too little may seem safer, but taking out a second loan when you borrowed too little can impact your credit.
• What is the interest rate on the personal loan?    Lenders have the right to offer loans at any legal interest rate. Your rate may depend on the type of loan you apply for, and your credit score.
• Will I need a cosigner?    You may need a cosigner if you don’t have the right credit score to qualify for the loans you want.
• What options do I have with my credit score?    Your credit score can be raised in a few ways. Open checking and savings accounts and credit accounts in your name if your credit is new. If you have bad long-term credit, clearing bad marks (such as missed payments) can help your score recover.
• Are there any fees associated with the loan?    Loan fees are at the discretion of the lender. Personal loans may involve origination fees, administrative fees, prepayment penalties or other fees that are legal in Texas. These fees must be spelled out in the loan application. Consider having a lawyer review any agreements.

Find the best Texas personal loan

You’ve learned a lot about Texas loans. Now, you know what sets a loan apart as a personal loan, the different types of loan options available, and some questions you should ask before you sign. Use what you’ve learned to get through the online application process and find a personal loan that meets your needs.