The best personal loans can be used for just about any reason, including:
A secured loan means that you as the borrower have to pledge collateral to borrow money. For a personal loan, this means that personal loan companies would ask you to pledge an asset with equal value for the amount of your personal loan. Personal loan companies want to minimize their risk in case you do not pay back your personal loan.
Unsecured personal loans are the more common type of personal loans. Unsecured personal loans do not require any collateral, so personal loan companies take more risk.
So, if you ask where to get a personal loan, you are better off borrowing an unsecured personal loan because you don’t have to pledge any collateral. Most personal loan companies, including online personal loan companies, deal with unsecured personal loans.
APR, or annual percentage yield, is the cost that you will pay to borrow a personal loan. APR is the annual interest cost plus any fees charged by the personal loan company, such as origination fees. There are two main types of APRs: fixed APRs and variable APRs. Most personal loans are fixed APRs. Here is the difference:
There are several reasons to get a personal loan. The most common reason to get a personal loan is to pay off high-interest credit card debt and get a lower rate, which is known as credit card consolidation or credit card refinancing. If you can get a personal loan with a lower interest rate than the interest rate on your credit card, then credit card consolidation may be a smart financial option for you. If you have good credit, interest rates typically are lower with personal loans than with credit cards. Unlike a mortgage, personal loans are unsecured debt, which means they don’t require any collateral. Other popular reasons to get a personal loan include funding home renovations or making a major purchase when you don’t currently have money available. Before borrowing a personal loan, compare rates, lenders and loan terms, and make sure you can afford your monthly payments.
Personal loans and personal loan rates are dependent on several factors, including your credit history, credit score, income, expenses and debt-to-income ratio. Each lender has its own underwriting criteria to determine who gets approved and what the rate will be. If you have a history of financial history, good to excellent credit score, and steady monthly income, you could get a lower interest rate than a borrower who has bad credit or no credit history. Lenders want to lend a personal loan to borrowers who will repay their personal loan in-full and on-time. Your interest rate will be based on your creditworthiness and your default risk. The lower the risk, the lower the interest rate that you can get. Lenders generally work with three main credit agencies: Equifax, Experian and TransUnion. Your credit score is comprised of five components: credit history, payment history, types of credit, new accounts and amount owed.
When you apply for a personal loan, personal loan companies will require several documents. While the requirements vary by lender, most personal loan companies enable you to submit the documentation online. This is very convenient for borrowers who want to know where to get a personal loan without the hassle of meeting with a loan officer at a bank, for example.
Here is some of the information you will likely need to apply for personal loans:
Some personal loan companies may ask for more information, but typically these are the minimum requirements.
While it varies by lender, you could borrow up to $100,000 for a personal loan. Each personal loan company has its own underwriting criteria, and the amount you can borrow may be impacted by your income, other debt, debt-to-income ratio, credit history and credit score, among other factors.
Applying for a personal loan is a simple process. Once you have determined that a personal loan is right for you, here is how to apply for a personal loan in 4 easy steps:
To get approved for a personal loan, there are several steps that you can take. Personal loan companies want to lend to responsible borrowers with good to strong credit. Personal loan companies may also look at other criteria such as your income and your other debt. Personal loan companies want to ensure that you can pay back your personal loan in full and on time. Borrowers with higher income and stronger credit may qualify for the best personal loan rates. However, if you don’t have good credit, you can apply with a qualified, creditworthy cosigner who can assume equal financial responsibility for the personal loan. A cosigner can help you get approved for a personal loan and get a lower interest rate. who has good credit and stable income can sign for the personal loan with you and assume equal financial responsibility.
While funding time can vary by lender, many personal loan companies can fund your account as soon as the next business day. Other lenders may take up to a week to fund your account based on your application and the specific personal loan company.
The best personal loans can help you increase your credit score. Credit bureaus, the companies responsible for your credit score, analyze various criteria to determine your credit score. One metric is the types of debt that you have. If you only have credit card debt, having a personal loan can help diversify the types of debt that you have.
For example, credit cards are revolving credit, which means you can repay your debt balance one month and borrow again the next month. Unlike credit cards, personal loans are installment debt, which means that you pay off the same amount each month. Therefore, having a personal loan can help diversify your credit, which can help raise your credit score.Of course, taking out a personal loan simply to raise your credit score is not necessarily a wise decision. However, if you have to choose between credit card debt and a personal loan, the best personal loans may offer better personal loan interest rates than credit card debt interest rates. With a personal loan, you will also get a fixed interest rate, whereas a credit card typically offers a variable interest rate. A fixed interest rate can provide for predictability and certainty each month when you repay your personal loan.