Frequently Asked Questions
It can be hard to understand personal loans. Even if you get the basics, you’re likely to still have plenty of questions. This FAQ is designed to give you the best possible answers for all of your personal loan questions. Whether you have good credit or bad credit, need a big loan or a small one, or just want to better understand personal loans as a financial product, this is the place to get the answers you’ve been looking for!
Personal Loan Basics
This section helps you understand the basic foundations of personal loans. It covers the different types of personal loans. It also covers the basic concepts that govern how personal loans work. Use this information to get a better idea about personal loans so you can make smart financial decisions.
What is a Personal Loan?
A personal loan is just what it sounds like – a loan from a lender to a specific person. The loan can be used for any number of things. It also lets you use the money for whatever your needs are. That makes a personal loan an incredibly flexible and useful financial tool.
What Are Personal Loans Used For?
Personal loans can be used for anything you need some extra cash for. They can be used to consolidate credit card debt, fund a new business venture, cover medical bills, or anything in between.
How to Apply for a Personal Loan?
It’s easy to apply for a personal loan. Simply fill out an application with a lender. You’ll provide information about your income, and you give them permission to run your credit. Once that happens, you’ll get a decision on your personal loan request.
How to Take Out a Personal Loan?
There are lots of different ways to take out a personal loan. However, all of them require that you fill out some kind of application. This will let the lender evaluate your ability to repay the loan and interest. It also allows you to see what kind of rates you’re offered on a loan.
How Personal Loans Work?
A personal loan works in a very simple fashion. A lender approves your loan. They then give you the amount you asked to borrow in a lump sum. You make regular payments to repay the loan plus the interest rate the lender charges.
How to Get Approved for a Personal Loan?
The best way to get approved for a personal loan is to show that you can be trusted to pay it back. You can do this by having verifiable income. You’re also more likely to get approved if you have a higher credit score, as that tells a lender you can be trusted.
What Documents Are Needed for a Personal Loan?
The documents required for a personal loan depend on the lender. Most lenders want to see your previous tax returns, proof of income, and your credit records. You don’t need to provide your credit records. Instead, you give the lender permission to get them from the credit reporting agencies.
Are Personal Loans Secured or Unsecured?
There are unsecured and secured personal loans. The better question is what type of personal loan is best for you. A loan officer can help you understand what your options are based on your needs and situation.
What is an Unsecured Personal Loan?
An unsecured personal loan is a loan where you don’t have to put up any collateral. The lender trusts you to repay the loan without putting something valuable on the line that the lender can take if you default.
What is a Secured Personal Loan?
A secured personal loan is a loan that involves some kind of collateral. That means you offer something valuable that the lender can take if you default on the loan. This reduces the risk that the lender will lose money, and increases the odds you’ll get approved for the loan.
What Factors Should a Person Consider Before Obtaining a Loan?
There are several factors that someone should consider before they get a personal loan. You should think about why you need the loan, how much you need, and whether the interest you’ll pay is worth it. But the most important factor is your ability to repay the loan. Make sure you can repay everything you borrow and make payments on time.
Should I Get a Personal Loan?
In most cases, a personal loan can be the solution to your problems. However, you should make sure you understand what you’re getting into. That includes the terms of the loan and the interest rate. You should also ensure you have a way to make payments on the loan itself.
What is a Benefit of Obtaining a Personal Loan?
The primary benefit of getting a personal loan is that you can use it to buy something you need that you otherwise couldn’t afford. That includes things like medical care, car repairs, and more. You can also use the loan to help start a new business or fund some other venture.
How Many Personal Loans Can You Have at Once?
There’s no limit to the number of personal loans you can have at once. The only limit is the number of loans you can get approved for. That’s mostly determined by your ability to pay the loans back. As long as a lender is confident they’ll get repaid they’ll give you a loan.
What Does Personal Loan Approved in Principle Mean?
When a loan is approved in principle that means that a lender has agreed to give you a loan when you need it. Many people get this approval when they’re looking to make a big purchase, but haven’t found the right property yet. For example, if you want to buy a piece of equipment for a business but haven’t found the seller you want to buy from.
How Long Does It Take to Get a Personal Loan?
Different lenders take different amounts of time to issue a personal loan. Traditional brick and mortar banks can take a few days to a few weeks to give a loan. Online lenders will usually disburse a loan within 24-48 hours.
Can You Have More than One Personal Loan?
Yes. The only limit to the number of personal loans you can have is how many loans lenders are willing to approve you for. That means that as long as a lender thinks you’ll repay the loan, they will be willing to give you one.
How to Get a Personal Loan?
It’s easy to get a personal loan. You simply need to fill out an application with the lender and see if they approve your request. They’ll check your ability to repay the loan, as well as your creditworthiness.
What Can Be Used as Collateral for a Personal Loan?
Different lenders accept different things as collateral. The most important thing is that the collateral is valuable enough to reduce the risk the lender faces if you default the loan. You can use gold, jewelry, property, stocks, bonds, and more as collateral.
Should I Take Out a Personal Loan?
The main consideration you need to make when deciding if you should take out a personal loan is your ability to repay the loan. If you can repay the loan, and if you need the money, then you should take out a personal loan.
Are Personal Loans Bad?
Personal loans aren’t bad. In fact, they’re essential to the modern economy. Many people have great ideas for businesses but lack the capital to pay for them. They also might need cash for medical expenses or car repairs. These are the things that allow society to function.
What is Pre-Approved Personal Loan?
A pre-approved personal loan is a lender’s way of saying that they’re confident that you would get full approval on a loan if you apply. Pre-approval is usually based on credit information the lender has on you. You can still be denied for the loan after a full credit check, but pre-approval is a strong indication you’ll get approved.
What is a Personal Guarantee on a Loan?
A personal guarantee on a loan is when a business owner or some other kind of business executive offers their personal money as collateral should a business default on the loan. Some lenders require this promise before they’ll lend money to a small business.
Personal Loan Qualifications
The financial industry likes to keep qualifications for their products a bit of a mystery. This section is designed to help you understand what it takes to qualify for a personal loan. That includes personal loans for different credit levels, and personal loans for different situations.
How to Qualify for a Personal Loan?
The best way to qualify for a personal loan is the have an excellent credit score. This shows lenders that you’re likely to repay the loan. It also shows that you’ve been trustworthy in the past with borrowed money, and makes lenders more likely to approve your application.
What Credit Score is Needed for a Personal Loan?
There are all kinds of loans on the market these days. Each one has different credit score requirements. The most important thing to do is to see what kind of loans are available for someone with your credit score. The better your credit score, the better the interest rates and terms you’ll be offered on a personal loan.
Can You Get a Personal Loan Without Collateral?
Yes, you can get a personal loan without collateral. This is called an unsecured personal loan. It’s harder to get an unsecured personal loan if you don’t have an excellent credit score, but it’s certainly still possible. You should, however, expect higher interest rates.
What Can Be used as Collateral for a Personal Loan?
Different lenders have different requirements for personal loan collateral. Generally, most lenders will accept anything that’s valuable enough to make back the money they’re lending you. That means you can use cars, real estate, jewelry, stocks, bonds, and more as collateral.
How to Get a Small Personal Loan?
The best way to get a small personal loan is to find a lender that specializes in small loans. There are lots of lenders online that focus on these types of loans. Make sure you’ll be able to repay the loan, and ensure you meet the credit score requirements of the lender, and you’ll have a small personal loan in no time!
Can I Get a Personal Loan with Bad Credit?
Just because you have bad credit doesn’t mean you can’t get a personal loan. There are many lenders that specialize in working with borrowers with bad credit. However, you should expect to pay a higher interest rate to compensate for the risk your credit says you represent.
Can You Use Spouse Income for a Personal Loan?
You can use spousal income for a personal loan if you’re applying for the loan jointly. You can also use a spouse’s income if they sign a personal guarantee for the loan, or co-sign the loan with you.
How Can I Get a Personal Loan with Fair Credit?
It’s easy to get a personal loan with fair credit! You simply need to find a lender that has credit requirements you meet. You won’t get the best interest rates on the market, but you can still get an affordable personal loan.
How to Get a Personal Loan with Bad Credit?
The best way to get a personal loan with bad credit is to offer some kind of collateral on the loan. That reduces the risk the lender faces if you default on your loan. As a result, you’re more likely to be approved. Just keep in mind that you lose your collateral if you default on the loan.
Can You Get a Personal Loan with No Credit History?
It is possible to get a personal loan with no credit history. However, you’ll need to show that you can be trusted to repay the loan. That means the lender might ask for some kind of collateral. They also might charge a higher interest rate or have a higher income requirement.
How Hard is it to Get a Personal Loan?
It’s not hard to get a personal loan. You just need to find a lender that works with people in your credit score range. You can check your credit score and then use that information to find the right lender for you. After that, it’s just a matter of applying and getting approval!
How Much of a Personal Loan Can I Qualify For?
The answer to this question depends on a few different factors. The biggest factor is how much income you have. The more money you make, the bigger the loan you can qualify for. You can also qualify for a larger loan if you have valuable collateral to offer to secure the loan.
How to Get a Personal Loan with No Credit?
The best way to get a personal loan with no credit is to have some kind of collateral you can offer. This reduces the risk to the lender. You can also get a personal loan with no credit based on your verifiable income. If your income is high enough, then the lender will be confident you’ll be able to repay the loan.
What Credit Score is Needed for an Unsecured Personal Loan?
Different lenders require different credit scores for an unsecured personal loan. The better your credit score, the more likely it is that you’ll be able to get a good interest rate on an unsecured personal loan.
Personal Loan Sources
There are lots of different places you can get a personal loan from these days. This section covers questions about different sources of personal loans. It also helps you decide where you should look to get the best deals on a personal loan given your situation.
Where Can I Get a Personal Loan?
There are lots of great sources for personal loans. You can look to traditional brick-and-mortar banks. You can also look for specialized personal loan lenders. There’s also a lot of options online. These businesses usually pool money from investors. They use the money to give loans, and repay the investors with the interest you pay.
Are Credit Unions Good for Personal Loans?
Credit unions can be an excellent source for a personal loan. However, most credit unions require that you be a member of the credit union before they’ll issue you a loan. One of the best things about credit unions is that they usually charge less interest on loans than traditional banks charge.
Where Can I Get a Personal Loan with Bad Credit?
There are lots of places to get a personal loan with bad credit. Many lenders specialize in helping people with bad credit get the loans that they need. Look online for a list of lenders that have lower credit score requirements to find a good place for a loan.
How to Get a Personal Loan from a Credit Union?
You can get a personal loan from a credit union the same way you would from any other financial institution. You fill out an application and provide the necessary paperwork. The one difference is that many credit unions require you to belong to the credit union before they’ll give you a loan.
Where Can I Get a Personal Loan with a Cosigner?
You can get a personal loan with cosigner anywhere you would get a personal loan. A co-signer increases the odds that the lender will be able to get the money they lend back. As a result, it’s a good way to get a loan when you have less than perfect credit.
Where Can I Get a Personal Loan Online?
There are lots of places to get a personal loan online. We’ve got a helpful tool that takes some basic information and then recommends the best places to get a loan. You can also look for lenders that specialize in giving loans to people with your credit score range.
How to Get a Personal Loan without a Cosigner?
The easiest way to get a personal loan without a co-signer is to have excellent credit. But even if you don’t have excellent credit, you can still get a personal loan without a cosigner if you can verify your income is high enough to repay the loan. You can also seek a secured personal loan by offering something as collateral.
Can I Get a Personal Loan from My Bank?
Almost certainly. Most banks will give personal loans. In fact, many of them are more willing to give a personal loan to someone that is already a customer at the bank. Many banks even give interest rate discounts if you’re already a customer.
How to Get a Personal Loan from a Bank?
You can get a personal loan from the bank the same way you’d get a personal loan from anywhere. You simply fill out an application and provide the required documents. If you don’t get approved, you can try re-applying with a co-signer or offering collateral.
Where is the Best Place to Get a Personal Loan?
There’s no one best place to get a personal loan. The better question is what’s the best place to get a personal loan for you. You should research different lenders and see what kind of interest rates they offer people in your credit score range to see who has the best deal.
Where Can I Get a Personal Loan Near Me?
If you’re looking for a loan near you, then you should check out local banks and credit unions. There are also specialized lenders that will offer you a personal loan.
Where Can I Get a Personal Loan with Fair Credit?
There are lots of places to get a personal loan with fair credit. Many banks, credit unions, and online lenders work with borrowers with fair credit. You won’t get the best interest rates on the market, but you also won’t get the worst interest rates either.
Where to Get a Personal Loan Fast?
The best place to get a personal loan fast is an online lender. These businesses usually make decisions on loans much faster than brick-and-mortar banks and credit unions. Many online lenders will disburse a loan within 24 hours.
Where Can You Get a Small Personal Loan?
The best place to get a small personal loan is online. There are lots of lenders that specialize in giving small loans. They can offer short-term and long-term repayment options. They also have a range of interest rates, depending on your credit score.
Who is the Person Who Signs the Loan Contract with the Borrower?
The person who signs a loan contract with a borrower is usually a loan officer. However, this may change depending on where you’re getting your loan from.
Who Has the Lowest Personal Loan Rates?
Every lender has different qualifications for their personal loan interest rates. The better way to approach this question is by asking who has the lower personal loan rates for you. Our tool can help you find the lowest possible interest rates on a personal loan.
Who Offers the Best Personal Loans?
All loans are the same. The only question is what the terms of the loan are. You should use our site to find a lender that offers the best terms on a personal loan for you. That will save you hundreds or even thousands of dollars over the course of your loan.
Who Gives Out Personal Loans?
Many businesses offer personal loans. You can apply to a bank or a credit union. You can also use different online sites to find the best loan for you. Our tool can help match you with the best lender for your needs.
What Banks Offer Personal Loans?
Nearly every bank offers personal loans. The only banks that don’t are those that have some kind of specialization. That means you can apply for a loan with almost any bank.
Personal Loan Financials
Financial math and concepts can be tricky. This section answers all of your questions regarding personal loan interest rates, tax situations, and the different financial terms that you’ll encounter when you’re shopping for a personal loan.
Are Personal Loans Taxable?
Personal loans aren’t considered income for tax purposes. That’s because you’ll repay the loan. However, if the lender forgives your debt, then that counts as income for taxes.
Are Personal Loans Bad for Credit?
Personal loans aren’t bad or good for credit. If you pay the loan on time then your credit score will go up. You’ll take a slight hit when you first get the loan, but that can go away quickly.
Are Personal Loans Good for Your Credit?
Personal loans are good for your credit if you make your payments on time. That shows lenders that you are a trustworthy borrower.
How Does APR Work on Personal Loans?
APR on a personal loan is a calculation that factors in interest rates, fees, and all other expenses to show you how much the loan will cost in total.
Can You Deduct Interest on Personal Loan?
This depends on many factors. You should talk to an accountant if you’re not sure if your loan interest rate is tax deductible. It depends if your loan is for business, education, or more.
Are Personal Loan Interest Tax Deductible?
Most personal loan interest isn’t tax deductible. However, if you’re using the loan for school, a mortgage, or to start a business, then it might be. Talk to an accountant if you have any questions about your loan.
How to Refinance a Personal Loan?
You can refinance a personal loan by working with a lender. A new lender might offer you better interest rates on your loan. You then take out a new loan to pay off the old one. Then you pay the new loan at a lower interest rate.
How to Calculate a Personal Loan?
There are lots of ways to calculate a personal loan. We offer a free personal loan calculator that helps you understand how much your loan will cost.
How to Calculate Personal Loan Interest?
Calculating personal loan interest depends on the way the interest is applied. There are several types of interest rates, and there are different terms on them. That means you should use a personal loan calculator to see how much your loan will cost.
Can You Refinance a Personal Loan?
Yes, you can refinance a personal loan. You should see what kind of terms you can get to ensure that it’s in your best interest to refinance your loan.
What Are Current Interest Rates for Personal Loans?
Different lenders charge different interest rates based on a variety of factors. The average interest rate for an unsecured loan is currently between 5% and 36%.
What is a Good Interest Rate for a Personal Loan?
A good interest rate for a personal loan is the lowest interest rate you can find. That will let you save the most money. Average interest rates for loans are between 5% and 36%.
What is the Difference Between APR and Interest Rate on a Personal Loan?
APR is a calculation that takes all the costs of the loan into account. That includes things like fees and charges as well as interest rates. Interest rates just show how much you’re being charged on the loan itself.
How Much Personal Loan Can I Get?
The biggest factor for how much of a loan you can get is your ability to repay the loan. The more money you make in verifiable income, the more loan you can qualify for.
How Can I Get a 50000 Personal Loan?
There are lots of places to get a 50000 personal loan. You can try banks and credit unions first. You can also look for online lenders that give loans up to 50000 out.
What Happens If I Default on Personal Loans?
If you default on a personal loan then you’ll take a big hit on your credit score. The lender will try to seize any collateral you put up for the loan, and you’ll be sent to a collection agency.
If the Fed Reserve Increases the Interest Rate Will Interest Go Up on Personal Loans?
Interest will go up on new personal loans. It can also go up on existing personal loans if your loan has a variable interest rate.
What is the Interest Rate on a Personal Loan?
The interest rate on a personal loan is how much the lender charges you for the loan. The better your credit score, the lower the interest rate you’ll get.
What is the Average Interest Rate on a Personal Loan?
The current average interest rate for a personal loan is between 5% and 36%. The exact rate depends on your credit score, income, and other debt obligations.
What is the Best Personal Loan Rate?
The best personal loan interest rate is the lowest one you’re offered. Rates depend on lots of factors. Most rates are between 5% and 36%.
What is the Highest Personal Loan Amount?
Every lender has different caps on how much of a loan they’re willing to give. You should look through different lenders to see what their maximum loan limit is.
Can I Pay Off a Personal Loan Early?
You can pay off a personal loan early. For some loans, this will save you money on interest. However, some loans charge a special fee if you pay early. Check your loan terms to be sure.
Personal Loan Uses
Lots of people wonder about how they can use a personal loan. The short answer is that you can use a personal loan for almost anything. However, it’s important to keep in mind that the lender will usually ask why you want the loan and take that into consideration when considering approval.
Which Best Describes A Way People Can use Personal Loans?
People can use a personal loan for nearly anything. That includes medical bills, consolidating debt, launching a new business, and more.
What Can I Use a Personal Loan For?
You can use a personal loan for almost anything. The lender will want to know why you want the money. They’ll also want to ensure you can repay the loan.
Can I Buy a House with a Personal Loan?
You can buy a house with a personal loan. However, you’ll get a better deal if you take out a mortgage. That allows you to deduct the interest from your taxes. It also usually has a lower interest rate.
Can I Use a Personal Loan to Buy a Car?
You can buy a car with a personal loan. However, you’re usually better off with a specialized car loan. That will get you a lower interest rate.
Should I Get a Personal Loan for a Car?
You can get a personal loan for a car. However, it’s better to look for an auto loan. These give you better terms and are easier to get for most people.
Should I Consolidate Credit Card Debt with a Personal Loan?
You can consolidate debt with a personal loan. Debt consolidation loans are just a specialized type of personal loan. You should do this if it will lower the amount you pay on your debts and help you repay the debt faster.
What is Better a Personal Loan or Home Equity Loan?
Everyone is in a different financial situation. That means there’s no way to know which loan option is best for you without knowing lots of specifics. Talk to a bank or lender to find out what option is best.
Specific Personal Loan Cases
There are lots of specific cases involving personal loans. This section covers some of the most common specific personal loan questions that we’ve heard.
Can You Balance Transfer a Personal Loan?
That depends on the credit card company you’re trying to use and your lender. Some companies will allow this, while others will not.
Can Personal Loans Be Included in Bankruptcy?
Yes, personal loans can be included in bankruptcy. There’s a very limited number of things that bankruptcy doesn’t cover, like student loans and alimony payments.
How Can I Get a Personal Loan with No Job?
It’s very hard to get a personal loan without a job. If you have some other kind of verifiable income, then you can still get a loan. You can also get a loan if you have enough collateral to make it worth the risk to the lender.
Can You Consolidate Personal Loans?
You can consolidate personal loans. Different companies have different policies when it comes to what they’re willing to include in a consolidation loan, so check with your lender before applying.
Can You Cancel a Personal Loan?
Most banks and lenders have a period of time where you can cancel your loan. This is called a withdrawal period. You’ll need to check with your specific lender to get details.
How to Record a Personal Loan in Quickbooks?
You’ll need to create a liability loan account in your books. You can do this through the banking section of the main tab. This is also where you record loan payments.
How to Make a Personal Loan Contract?
To make a personal loan contract you need a description of how much is being lent and how the borrower will repay the loan. If interest is being charged, then you also need an amortization table.
How to Write a Loan Letter from Person to Person?
Writing a loan letter involves a description of how much is being lent and what the repayment terms are. If you’re charging interest on the loan, then you also need to include an amortization table.
How to Get Personal Loan For Housewife?
There are a few ways to get a personal loan for a housewife. You can offer something as collateral. You can also get a co-signer to back you.
How to Settle Personal Loan?
You can settle a personal loan by negotiating with your lender. Most lenders don’t like to settle loans. That means you’ll need a convincing reasons why it’s in their best interest to do so.
How to Get a Personal Loan While in Chapter 13?
It can be hard to get a personal loan while you’re in bankruptcy. The best way to do so is to get a secured personal loan that has collateral equal to or greater than the loan principal.
How to Structure a Personal Loan?
There are lots of ways to structure a personal loan. If the loan is between you and another person, then it’s entirely up to you. You can require monthly payments. You can require a lump sum payment after a certain period of time, and more.
What Happens to Personal Loans If You Divorce?
This is a complex question that usually requires a divorce attorney. It depends on whose name the loan was taken under. If both names are on the loan, then the payments on the loan become a matter to be worked out in court.