Life is full of the unexpected, and you never know when you’re going to be short on cash. There can be bills that you weren’t planning for, an emergency, or just something that you want to do or need to pay for, and you don’t have the extra money readily available to pay for it. When this happens, personal loans are a great option for consumers.
There are different types of personal loans that you can explore, to find out what option makes the most sense financially. You will first need to determine what type of loan is the right fit. Explore these different options and talk with financial professionals about these options.
Unsecured Bank Loan
An option for people who have good credit, and a good standing relationship with their current financial institution, can try to get an unsecured loan from their bank. This will be a loan that isn’t backed by any type of asset or collateral.
You can usually spread this out over a long period, like 5-10 years, or more depending on how much you borrow and how low you want your monthly payments to be. Look at the interest rates of different financial institutions in your area to see who is offering the lowest rates and best offers on personal loans before you start the application process. The lender may also give you a credit card instead of a loan for the amount you’re applying for.
Secured Loan
If you have equity in an asset, like a home or a car, you can get a secure personal loan. This means you will use the equity that you have in that asset as collateral, and it will be at risk if the loan doesn’t get paid.
Banks are more willing to work with someone who doesn’t have an ideal credit score, if they are willing to put something up as collateral. This secures the amount that the bank loans are, and they know that they will be able to get reimbursed no matter what. Doing this can be an easy way to get a loan without a cosigner, but be sure you are ready to risk what you have.
Payday Personal Loan
When your credit is low and you don’t have a great borrowing history, asset, or high salary, a payday personal loan can be the only option. With this loan you will use proof of your current income and identification, and you will be able to get cash that same day.
This type of loan will come with a higher interest rate than the options listed above, but if you can pay the loan back as agreed, you can avoid late fees and other problems. A payday loan will also usually be paid back over your next few paydays, so you have to come up with the repayment quickly. You may also be able to take out a loan on a tax refund that you haven’t received yet, through this method of borrowing.
Those who don’t have ideal credit and get approved for a payday personal loan can improve their credit score and lending history by making the payments on time. This can make it easier to get a more traditional personal loan in the future.
Many factors will help decide if you are an ideal applicant for a personal loan or not. Things that loan providers will look for in a candidate include:
• High credit rating
• Regular wage deposits
• Child support or alimony deposits
• Positive lending history
• Assets
• Low debt-to-income ratio
The lenders want to look at your financial history and see that you have a stable wage coming in, that you have borrowed money and paid it back successfully in the past, and that you don’t have a lot of debts that you have to pay.
If you are overwhelmed with debts and this is one of the reasons why you are looking to get a personal loan, a debt consolidation personal loan may be the best option to explore. This would allow you to put all your debts into one loan and a single monthly payment, instead of trying to juggle the multiple payments you have each month.
When you start to apply for these loans it’s important to do your research in advance. Take the time to look at the preferred qualifications, the interest rates, and any late fees that will apply if you are late with your loan payments. If you have questions, take the time to call each provider to discuss your situation, and financial information, before submitting any applications.
Every time your social security number is used on an application, and your credit information is pulled, this is a negative mark on your credit rating. If your credit report shows that you are applying for multiple different types of loans with many different lenders, this can be a red flag and you may not get the loans you were hoping for. Instead, find the right fit, then take the time to fill out your personal loan application carefully and thoroughly.
You can pull your credit reports from the three different credit reporting companies once a year for free, and without any penalty. Do this before you start applying for the different personal loan options, to see if anything is alarming that could deny you from getting the personal loan that you need.
If there is something on it that you can easily take care of, or if there are any errors that you want to dispute, do this quickly. This way those issues won’t appear when you are looking to get a loan. Many people can be unaware of items bringing their credit report down, so check regularly to maintain your credit.
If you need a personal loan, use these tips and find the right loan today. You don’t have to struggle when something you weren’t planning for erupts, and instead get the money you need now and pay it back over time.