Whether you like it or not, but the sad reality is Americans are notorious spenders.
For 28 percent of adults who have no emergency fund, getting into the habit of applying for personal loans has become a norm. Imagine, you lost your house in a fire or faced the need for a car engine replacement.
The scary reality, right? The last thing you want to end up hundreds of thousands poorer overnight.
No one can deny, sticking to the budget is a tough gig. All in all, only 18 percent of Americans say they could live off their savings for at least six months.
Stashing cash in a money market account is definitely a way to protect yourself during an emergency. But what if that’s not your case? Then, turning to online personal loans would look like a reasonable solution. They work great for elephant-sized expenses like buying your first home, paying for university fees or getting married.
Financial stability is still a dream for 57 percent of the country. Household expenses, student debts, medical emergencies, and expensive purchases stand in the way.
But who said you can’t take small personal loans for minor purchases? You never know how the option can save you time & effort before you try.
How Do Personal Loans Work?
When we talk about sticking to a budget, we often focus on big-ticket expenses. In fact, the little purchases we make every day, which we think are no big deal can add up to big expenditures at the end of the day. An unsecured and easy to get, a personal loan helps households meet any financial shortfall.
- Debt consolidation is one of the most common reasons why people apply for personal loans online.
Typically, under a small personal loan, most lenders understand a sum of roughly $3,000 or less. Since lenders make money from interest, they would rather give money to a person who wants to borrow a larger amount. Although the sum varies from lender to lender, finding the one willing to offer $5,000 can be difficult. It’s much easier to find lenders who provide $1,000 or less. But before you decide to make expensive surprises more manageable, do research.
So, when you shop for a loan, make sure you know what you get. Learn about the interest rates, origination fees, monthly payments, repayment terms or some hidden fees, if any. And never forget to do research online before getting your hands wet. All in all, social proof impacts our purchasing behavior.
Are There Any Personal Loans for Bad Credit Possible?
Sometimes finding a lender who meets your requirements becomes a much easier hurdle as the one related to your credit score. The three-digit number that represents your creditworthiness ranges from 300 to 850.
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The higher the number, the better your credit. Indeed, you will want to find a loan with an as low interest rate as possible but there is a trick. Without good credit, that journey becomes not a smooth track. Thus, in times where traditional banks won’t help, online lenders offer to borrow with a credit score of say, 550.
“Understanding the meaning of credit is the first hurdle to get over. Credit is simply a tool. Once that has been established, the principles on why it is so important can, then, be discussed.”
– Will Roundtree, credit and financial counselor from Black Enterprise
The benefit of bad credit personal loans is the help they provide when an emergency hits. The options for people with low credit are limited, without a doubt. Yet, having a poor credit score doesn’t always tell the whole story. A missed payment or late bill shouldn’t be a reason for not getting a bad credit personal loan. Instead, it may eventually help you earn points to build your credit.
As a rule, the main difference between personal loans with bad credit and the one with good is in higher interest rates. The three-digit numbers of people with good credit show their ability to repay.
- Once you decide to apply for a personal loan with bad credit, make sure you know how poor it is.
If a personal loan for bad credit is your only option, get ready for higher interest rates and shorter terms. Just because each consumer has his/her needs & unique story, different lenders offer different options. Your goal is to find a lender who specializes in areas designed to meet your requirements.
10 Uses of a Personal Loan You Need to Know
There is no limit to the way of using the option. You may think of taking out a loan for many reasons. Personal loan companies who offer to borrow with so-called ‘zero questions asked’, doesn’t limit you in purposes and desires. So, if you’ve done the research and know your interest rates, go ahead and get a loan you need.
- Medical need. No one is guaranteed to live a long life. Medical exigencies are no strange to each of us. If there’s no option to take money from your savings, apply for a personal loan to save time & effort. Being in a medical emergency means already a lot of stress, so make things easier and faster.
- Higher education. In today’s world, a good education is a must. It costs quite high today but is the necessity that secures a bright future. Who can help the middle-class families to bear that cost? That’s where personal loans for fair credit can come to the rescue.
- Debt consolidation is one of the common reasons why people apply for loans. Especially for those with bad credit. Struggle to pay off multiple debts or outstanding credit? Take the easy way out and pay off your debt using personal loans for poor credit.
- Pay off credit cards. It’s one of the best ways to reduce the amount of interest to pay off credit cards. Thus, you get the lower interest rates and finite terms with a clear end date in sight.
- Home remodeling is another popular reason people apply to lenders. Need to remodel your kitchen or refresh your landscaping? Go for personal loans and get the work done.
- Wedding expenses. Ready to walk down the aisle? Get personal loans with online approval and pay for the engagement rings or bride’s dress. Kaboom, one less problem to worry about.
- Buying a car or bike. Today’s speed of life often seems like a high-way road. Investing in a two-wheeler or a four-wheeler becomes a necessity. Is it beyond your monetary capacity? Get a personal loan and enjoy the benefits of owning the vehicle.
- Vacation expenses. Struggle to pay for a dream vacation? Without a doubt, it can cost you a bundle. The solution? Find the best place to get a personal loan that can help fund your journey.
- Staying technologically advanced. Day by day new technologies popup in our lives. No matter what modern gadget you need to purchase, poor credit doesn’t need to bother you. Small personal loans for bad credit would be just the thing.
- Funding a large purchase. No matter how accurate you use your household appliances or electronics; they use to break. You can wait for months to save up for a new washer or enjoy a new one within the next business day.
Now, what do you think? Which best describes a way people can use personal loans?
Why a small personal loan is better than a credit card?
Are There Other Types of Small Loans?
If you don’t have a savings account to dip into, learn your options. Just because there are different types of small loans, getting the one that will cost you less expensive is crucial. APR and fees are what you need to look for in the first place.
If you don’t want to get a typical two-week small loan with nearly 400% APR, do research. It’s not a secret that the variety of lenders aim to make borrowers renew their loans so many times that they end up in debt bigger than the original loan amount.
Typically, small loans fall into one of two categories – secured and unsecured ones. Secured options are tied to an asset a borrower owns. This could be a house, car, or business. As such, they offer more considerable sums & longer repayment periods. With an unsecured loan, you don’t need any collateral.
What Are the Benefits of Obtaining a Personal Loan?
- No limitation on end-uses. No matter your purpose, small personal loan offers you to get the money you need with no fuss. Whether it’s debt consolidation, education fees or wedding expenses, it’s the easiest way to get cash.
- Quick disbursals. With 600 credit score and more, chances to get a personal loan online are much higher. Moreover, the higher credit score can speed up the application process and you’ll get money as fast as the next business day.
- No collateral required. That’s one of the benefits you can’t underestimate.
- Choose your terms. It’s up to you to choose the terms that suit you best. Once you know how much you can pay off per month, decide the affordable terms.
- Fixed rates. This is another benefit of small loans online to keep in mind. No need to worry about the interest rate changes, they remain fixed for the entire loan term.
- Good credit not required. Apply even with a credit score under 600.
- Mobile friendly. Thanks to various mobile apps, getting a small loan right from your phone is as simple as that.
- 24/7 online applications.
Where to Get a Personal Loan
Once a thought ‘I need a personal loan’ arises, it’s easy to get started. The simplicity of the option is that you can apply for it everywhere. Whether it’s a bank, credit union, government, or direct lenders, your possibilities are limitless. The trick is to make sure that you get the best offer.
Top personal loans should be high on your list when first get started. The best personal loan lenders give you access to higher loan amounts, lower interest rates, and credit building products over time.
“Personal loans can be a good option when building credit or consolidating debt. But before you take on a loan, thoroughly research and compare all your options. Everyone has their own unique financial situation, and not all lenders will be a great match. Investing time in your personal finance decisions will be some of the best time you ever spend.”
– Counsel Brodsky, from Money Expert
There is nothing wrong with private personal loans. The only difference is in higher interest rates if compared to the ones offered by traditional banks. So, think on your feet first. The only thing that matters is your financial health. We all have our unique stories and needs, so it’s up to you to decide which way to go.
How to Apply for a Personal Loan
Now, when you decided that you need to apply for a loan, there are several recommended steps to follow:
- Know Your Credit. The first and foremost task is to check your credit regularly. You never know how far you can get with an online personal loan until you don’t know your credit score. It’s your financial health, which gives you a clear understanding of your possibilities – how much you can get and how high will be your interest rate. In fact, you can do it for free by using the three most popular credit bureaus.
- Pre-qualifying Process. That’s where a soft credit check is done. It will take no more than five minutes per lender to complete your pre-qualification. Here’s where you research the rates, payment, and terms you might receive for a short term personal loan. The private lender instead gets your basic information needed to complete the process.
- Fill Out the Loan Application. Now, when you’ve chosen a loan that suits your needs, go on and fill out the loan application form. Depending on the lender and personal loan options, the expiry date to fill out the application form varies. Make sure that you know the end date.
- Submit the Application and Get Approved. Once all the data is correct, submit the application and wait for its approval. Again, the approval terms vary from lender to lender but one thing is certain, get ready to wait. Once you’re approved, you sign the loan agreement and get the money as fast as the next business day.
- Getting a Personal Loan is Easy. As you see, getting small personal loans online doesn’t have to be hard. Even if you know that you have 500 credit score or lower, getting personal loans with poor credit is still possible. Your task is to know your options before the application starts.
How Long Does It Take to Get a Personal Loan?
Generally, when you need extra money, knowing how long the loan process will take can help you save time & effort. There is no exact term. So, if you apply for a $5,000 personal loan, learn the data upfront. Getting approved for small online loans can take anywhere from several minutes to a couple of weeks.
That’s why you need to do research first and check the direct lenders’ eligibility. It all depends on the application process. In times when applying for personal loans online can take a few minutes, other lenders might require more time.
Also, never forget that your documents need to be ready before you apply for small cash loans. As a result, you don’t make mistakes and save time right from the start. So, whether it’s the exact number for your salary or monthly debt payments, no problem, you have the data right at your fingertips.
For bad credit borrowers finding the personal loans company that they are eligible for might take more time. All in all, applying for personal online loans doesn’t need to be a tough gig. Think on your feet and once an ongoing or upcoming emergency demands your financial attention, go ahead to save a bundle from day one.