Detroit, Michigan ranks 31st in the U.S. national average credit score rating, sitting at an average credit score of 697. With that said, if you are looking to take out a personal loan, Detroit, Michigan offers a plethora of options for you to choose from. However, before you begin taking out cash for a vacation or home improvement, there are a couple aspects of a personal loan you need to become acquainted with.
Lingo of A Personal Loan
As with any loan, there are specific words across the board that loan lenders will use to describe certain areas of a loan. Most importantly, if you are new to personal loans, this will give you an insightful look as to what you can expect to see when shopping around for a personal loan.
- Secured Loan – This is used to describe loans that require a form of collateral in the case you default on your payments. This mostly happens for loans over $25,000.
- Unsecured Loans – A term used to describe loans that do not require collateral. However, if you are late on your payments or you default, it will affect your credit score.
- Credit Score – This is what is used widely across all financial institutions to give a background into your financial history and point average depending on certain factors discussed in the next section.
- Interest Rate – The total sum you have to re-pay in addition to the amount you borrow. This is calculated as a percentage of the loan itself and is primarily dependent on your credit score.
Know Your Credit Score
As an extremely important aspect of taking out a personal loan, knowing your credit score helps you understand how much you may be pre-approved for and what financial institution you can apply for. Most importantly, there are certain factors that lenders look for, that if in good standing will allow you to ask for a large amount with low interest rate. These factors include outstanding debt, bankruptcies or foreclosures, and credit utilization.
Shop Around for The Best Lender
Shopping around for the best personal loan lender allows you to assess the best lender in your area. Most importantly, you may find lender that work within your financial bracket and credit score rating that gives you the benefit of low interest rates. Below is a list of what to look out for when shopping around for a personal loan lender.
- They have a physical address.
- Are they a bank, credit union, or private lender?
- Do they work with you credit score?
- Can they supply the amount you desire?
- What is the term length?
- Read their reviews.
- Ask around.
- Meet in person.