In the past year, 34% of Americans have taken out personal loans. That equals about 83.5 million people. In fact, personal loans are the fastest growing lending category.
So if you’re thinking “I need a loan”, you’re in luck. Now is a great time to get one. Read on to learn everything you need to know and how to get one soon.
I Need a Loan. Now What?
If you need a loan, the first thing you should do is figure out what your credit rating is. This will help you to know what lending avenue you should pursue.
Your Credit Rating
If you have a credit rating of 690 or higher, you have excellent credit. That means that you have the most options for where to get your personal loan from.
Why? Because lenders look at a person’s credit to determine how risky it is to loan them money. People with bad credit are riskier investments.
That doesn’t mean that if you have poor credit you can’t get a loan. It just means that you may not have as many options as someone with excellent credit.
Next, gather the information that lenders will likely ask for. Have copies ready to go. This will save you time and get you your loan even faster.
You will need various pieces of information.
This includes a copy of your last two paychecks and your credit and banking statements. You will need your latest tax return, photo identification and proof of rent or mortgage payments.
Now let’s look at the various lenders you can apply to for a personal loan.
Loans From a Bank
If you have average or poor credit, a bank may not give you a loan. Or if they do, the interest rate will likely not be stellar.
Also, getting loans from banks is not quick. If you need cash right away, a bank loan may not be your best bet.
You can expect to wait around seven days until you have the funds in your account. In some cases, it can take even longer. This includes the time it takes to complete the application and gets approved.
Loans from banks are directly deposited into your bank account.
Personal Loans from Credit Unions
If you want a small loan, under $2500, a credit union is your best bet. Some lenders including certain banks don’t offer loans for that amount.
Plus, neighborhood credit unions are more willing to give loans to those have average or poor credit.
Credit unions are non-profit institutions who want to invest in their local area. In order to get a loan from a credit union, you need to join as a member.
If you need to get a loan but are having trouble qualifying, a secured loan is an option. Banks and credit unions both offer secured loans.
To get a secured loan, you need to offer an asset as collateral. This may be your car or house or another asset. This makes your loan risk-free for the lender.
If you fail to repay the loan, the lender gets to keep your asset.
The great thing about a secured loan is that it comes with a lower interest rate. That’s because the bank has very little risk.
But, if you default on just one payment, your lender can legally collect your collateral.
Personal Loans from Online Lenders
Another option is to get a loan from an online lender.
There are hundreds of online lenders. And they are all vying for your business. That means that you will likely get a great rate.
Usually, online lenders run a soft credit check on you to pre-qualify you. These soft credit checks don’t hurt your credit. It’s OK for you to pre-qualify for several online lenders to find the best rate.
Once you go through with the loan and get the money, then your credit will take a slight dip. But don’t worry. As you pay off that loan on time, your credit will jump back up.
The best thing about online lenders is that they need to compete with traditional lenders like banks. So they offer many perks such as no fees, flexible payment schedules and lowering your interest rate while you pay back the loan.
All you need to do is find an online lender that is geared towards people like you. Whether you have strong credit, no credit, or bad credit – there’s an online lender that specializes in loaning funds to people like you.
You get approved instantly, get your money right away and can set your repayment timeline (up to six weeks later).
A Co-Signer Loan
Just like with a mortgage, if you can’t qualify on your own, a co-signer can help.
Do you have a good friend or family member you can ask to help you out? You co-signer will need to have good credit for you to qualify. And you may get a better interest rate this way.
Just be aware, if you don’t pay the loan, your co-signer is responsible for paying it.
Thanks for reading. As you can see, there are many options available to you when you need a personal loan. So next time you think “I need a loan,” you’ll know exactly what to do.
Want to be financially independent? Check out these 10 steps to manage your personal finances like a boss lady.