There are many great loan companies and loan types, so we help make things simple.
When choosing a loan, there are multiple factors that should be taken into consideration. To name a few: How much debt do you have? What is your credit score? What is your main goal and do how long before you can pay the loan back? All items should be reviewed first.
Related Topics (ads)
About Personal Loans
What is a Personal Loan and Should You Get One?
A personal loan is an amount of money loaned to an individual typically without any collateral. Though they used to be seen as a solution for people in dire financial straits, today the options and terms are better than ever and more and more everyday people are taking out personal loans.
A personal loan, also sometimes referred to as a signature loan or an unsecured loan, can be a great idea if you have outstanding credit debt and a less than stellar credit score. If you use the personal loan to pay off the credit card, you can improve your credit score and then pay off the personal loan, which will almost certainly have an easier interest rate than the credit card.
Even if you don’t have credit debt, taking out a personal loan and repaying it is a good way to establish positive credit, which will help you down the road when you apply for a car or house loan.
If you have multiple outstanding debts – or just one – at a high interest rate that’s taking a real bite out of your paycheck each month, then a personal loan could really help out. Find a lender that can give you a personal loan with a friendlier interest rate, and then use that to pay off the other debts.
A personal loan can help you pay for home renovations, which can significantly improve the value of your home. This can really pay off if you’re looking to sell the house in the near future, or if you’d like to increase the value of your home in order to borrow against the equity.
Things don’t always go as planned, and sometimes we need a little extra help. A personal loan can help you handle unexpected medical bills, home repairs following a flood or a fire, or a sudden expense like a funeral. When hard times come, having some financial peace of mind can make things a little bit easier, and that’s no small thing.
Good to Know: Debt Consolidation
Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. This commonly refers to a personal finance process of individuals addressing high consumer debt, but occasionally it can also refer to a country's fiscal approach to consolidate corporate debt or Government debt.
Always know your options if you do have debt due to loans of any kind.
Myths About Personal Loans
1. Myth: Loans always have high interest rates
A common misconception surrounding personal loans is that they always carry high-interest rates. In reality, personal loans can be less expensive than other types of unsecured loans or even credit cards.
The key is having a good credit score that allows you to qualify for those lower interest rates. If you're interested in getting a personal loan, it's important to shop around with different personal loan lenders to see how rates compare.
Seeing what different lenders offer can help you find the best loan at the best rate. It doesn't have to be time-consuming either. You can quickly and easily compare rates and lenders by visiting Credible.com.
2. Myth: You need good credit to get a personal loan
While a good credit score helps if you're shopping for personal loans, it's not a set in stone requirement to qualify. There are numerous lenders that offer personal loans to borrowers with less than perfect credit.
Aside from credit scores and credit history, lenders can also take into account your income, employment history, and debt-to-income ratio (DTI). Your debt-to-income ratio is how much of your income goes to debt repayment each month. If you have a solid income, consistent employment, and a low DTI, those could help offset a poor credit score.
There are some trade-offs to keep in mind, however. Getting a personal loan with fair or bad credit can affect the amount you can borrow and, more importantly, your interest rate. Again, that's why it's so important to compare interest rates from different personal loan lenders to find the most affordable option.
3. Myth: Banks are the only personal loan lenders
This is one of the personal loan myths that used to be true. But thanks to the growing popularity of online lenders, you now have more options than ever for getting a personal loan.
Working with an online lender to get a personal loan can offer advantages. The application process can be fast and easy and you may get instant or near-instant approval.
EVERYTHING YOU NEED TO KNOW ABOUT A PERSONAL LOAN
Once you're approved, your personal loan may be funded in a matter of days. Online lenders can offer flexible repayment options and terms and potentially yield lower interest rates compared to brick-and-mortar banks.
Related Topics (ads)
Sources: Nerdwallet, Inc, Investopdia, Dictionary, Creditkarma, foxbusiness.com