If you want to consolidate debt, move across the country or finance an adoption, then you can get a personal loan. These loans typically range from $1,000 to $50,000. If you have a good credit score, then you can also get one with low interest rates. You still have still options if you have a low credit score or no credit history.
Credit is the key to Getting a Unsecured Personal Loan
Personal loans typically have higher interest rates. Your credit worthiness is one of the factors that determines your credit score. Your debt-to-income ratio will also be taken into consideration. Credit unions typically have loans with lower interest rates than banks. A credit union is also great if you need a loan under $2,500.
Lending Club, Prosper and Light Stream are some of the lenders that are designed for people who have good credit. They also cater to people who have high incomes. If you have poor credit, then you may have to get a loan with a co-signer. You can also secure the loan with collateral.
Keep in mind that the co-signer will have to make the payments if you are unable to. You can get loan from alternative lenders. However, these loans typically have higher interest rates. The interest rates can exceed 36 percent.
The interest rates on payday loans are even higher. In fact, the interest rates can get up to 300 percent. You may also be charged unnecessary fees.
What do you Need to get a Personal Loan
You will need to provide a form of identification, such as state ID, passport or driver’s license. You will also need documentation that verifies your address, such as a copy of lease and utility bills. Additionally, you will need to provide a proof of income tax returns, bank statements, pay stubs or W-2 forms. You may also be asked to provide the following social security number and employment information.
After you provide this information, you will be asked to specify how much money you need. You will probably be given two to five years to pay off the loan. Keep in mind that the longer you take to pay off the loan, the higher the interest rates will be.
How to get the lowest Interest Rates
If you have good credit, then you may be able to get a credit card with a 0 percent interest rate. This option may also be less expensive than taking out a personal loan.
You can get a lower interest rate by taking out a secured loan. If you are a homeowner, then you can use your house as collateral. Keep in mind that you can lose your home if you default.
Pay off Your Credit Card Balance
Even if you are paying your credit card bills on time each month, carrying a balance every month can count against you. You should pay off as much of the balance as possible before you take out a loan.
It is important for you to read the fine print on your personal loan agreement. Many lenders will charge you a fee if you pay the loan off before a certain date. You may also ask to provide your bank account number so that the money automatically comes out of your account every month. Make sure that you set up balance alerts so that you do not accidentally overdraw your account.
Furthermore, you should make sure that you are not being scammed. Before you select a lender, you should check with the Federal Trade Commission and Better Business Bureau.
A personal loan can help you finance your goals or get out of debt. You will need to look at the different options before you apply. You should also check the interest rates.
Robert is our in-house expert on personal loans and finance. He got an MBA, specializing in Finance, before joining the workforce. After working for multiple Fortune 500 companies in the past decade, he brings a wealth of knowledge and experience to the table.