There is a time when you need a loan for different reasons, such as starting a home business, vacation, education and many other uses. Whatever the reason is, getting a personal loan can give you the money you need.
The challenge is becoming increasingly difficult to qualify for a personal loan through your bank or credit union, especially if you want a larger amount. If you are a good customer and have good credit, you can usually get what is called a “signature” loan for $3,000 to $5,000. These loans are also called “character loans” or “good character loans” because these loans don’t require any collateral. Instead, the lender will usually look for an income and a decent credit history.
Because these loans aren’t backed by anything, they will typically have higher interest rates than other loans. However, the interest rate on a personal loan at a bank that values you as a customer is usually quite low compared to some alternatives. Check with your bank or credit union to find out whether they offer these loans, and what the application process is.
If you want a bigger loan, though, you will need to jump through some hoops. You will need to fill out a loan application, and you might even need to designate collateral. (Collateral is something of value that can be taken from you and sold to pay off the loan if you can’t pay it back.)
If you have poor credit or don’t think you can receive an affordable loan from a bank or credit union, don’t worry. There are other options for personal loans, beyond your bank or credit union. There are several places where you can get rates for personal loans with easy approval.
LendingTree.
The easiest one to use is LendingTree.com. Their form is quick and easy to fill out, and you’ll be comparing loan rates in no time. You only have to input what type of loan you want, the amount, your zip code, and a bit of other basic loan information, and then they provide dozens of loan options near you. The company has been around since 1996 and has excellent customer reviews. They also work with many different lenders, allowing you to not only get the best rates but to also skip the salesmanship that you might get through a local bank.
Peer to Peer (P2P) Lending
One of the increasingly popular options right now is P2P lending. Whether you are financing a business, paying for college, or trying to buy a motorcycle, P2P lending can help. You will have to apply for the loan, and your credit will be checked. BUT, a good story and business plan can help get the funding you need — and at a competitive rate.
Interested in learning more? Check out Lending Club and Prosper. Both are leaders in the P2P lending space with solid processes for loan origination, repayment, and tracking. My Lending Club review can help you get a better feel for how peer-to-peer lending works and whether it might be a good option for you.
Family and Friends.
If you have family members or friends who can help you out with the personal loan you need, you can often get the best loan terms. However, you want to make sure that you are positive that you can repay the loan; you don’t want to risk your relationship. Have a contract so that you are accountable, and so that your friend or relative know that you are serious. Be sure to include the loan term and the interest rate in the contract. While I wouldn’t recommend using friends or family for a loan, sometimes it’s the best (or only) option.
There are a lot of things you need to consider before you apply for a personal loan.
• The first, and most obvious, is to decide how large a loan you actually need. This might seem like a ridiculous tip to include, but it’s important enough to reiterate. Before you apply for your loan, sit down and calculate how much money you will need.
• Next, we need to make sure you understand how personal loans work. First of all, there are two main types of personal loans, secured and unsecured.
• A secured loan will usually give you lower interest rates, but you have to put something up as collateral for the loan, which means that if you don’t pay back the loan, they take your collateral.
• Unsecured loans, as you can guess, don’t require any collateral, but will have higher interest rates.
• The other basic thing to know about personal loans is what you will need to get one. The information you’ll need will vary depending on which technique you use to get the loan. Just about every loan is going to require basic information like address, birthday, and social security number.
• You will also need employment information, like your work history and pay stubs to verify your income. You will need to provide other sources of income like alimony.
• Depending on the loan type and amount, the lender may ask for other documents like a copy of your W-2 and tax information, as well as proof of address, bank statements, and your mortgage or rent statements.
Once you understand the basics, you should spend some time researching the different loan types, examining which might work best for you. There are several different ways to get a personal loan, and not every type will be a good fit for your situation. Fully understand the type of loan you are getting, the loan period, the payment methods, payment amounts, and any other important information.
Once you understand the basics, you should spend some time researching the different loan types, examining which might work best for you. There are several different ways to get a personal loan, and not every type will be a good fit for your situation. Fully understand the type of loan you are getting, the loan period, the payment methods, payment amounts, and any other important information.
