Personal loans have helped thousands of families survive while going through a financial hardship. Unexpected bills seem to appear at the worst time. Today personal lines of credit are available to borrowers that are looking for extra cash immediately.
There are many personal loan options available to families – but not all are created equal. This guide will walk through proven strategies for getting approved online.
No matter the reason, cash is always available to families that need financial help right away. Often times the loan application process can be completed online without ever stepping foot into a bank.
During the most recent credit crunch borrowers found it difficult to get approved for financing even though they had great credit. Anyone going through a difficult time and needs money fast must read our guide on qualifying for low interest loans.
We cover proven strategies to get approved for financing:
- Where to find low interest loans
- How to negotiate loan terms and closing costs
- Getting approved without a down payment or collateral
- How much can the average borrower qualify for
- How to avoid repaying the loan during financial hardship
There are countless sad stories of young couples and families that have found themselves in a worse financial situation after getting approved for a new line of credit.
Borrowers must take the time to review loan terms, interest rates, penalties and closing costs. This due diligence will be helpful when making sure short term loans are an affordable option in the long run.
Making the Most of Personal Loans
Every family will face unique financial problems. Unsecured loans are available for almost any use at anytime. Some of the most common uses for unsecured loans include emergency medical expenses, debt consolidation and auto repair bills.
Many have been able to use unsecured financing to fund the expenses required to start a small business. There are many costs associated with running a business and small business loans are a great way to get started with minimal risk. In the event a business fails and the loan cannot be repaid unsecured lines of credit can be erased during bankruptcy.
For homeowners that have limited cash or home equity, financing is available for home improvement loans. In addition, home repair loans can be used to upgrade appliances or make necessary repairs to a neglected HVAC system.
Personal loans can be used for many different purposes:
- Credit Card Debt Consolidation
- Home Improvments
- Auto Repair
- Medical Expenses
- Starting a Small Business
The list of uses for an extra source of cash is almost endless. Only a borrowers imagination and needs will determine what this extra money can be used for. There are always a few restrictions on financing that will vary from each lender.
One of the most common restrictions is that unsecured financing cannot be used to pay for college tuition as there are many regulations on education loans. Borrowers are encouraged to check with their lender about these limitations before applying for financing.
Benefits of Personal Loans
Personal loans are a great financing option for many reasons. The most obvious is that no down payment or collateral is required for an unsecured line of credit. Another benefit is that these loans have low interest rates compared to other financing options like credit cards or payday loans.
When in a tight situation short-term loans give borrowers access to cash immediately. And as we covered before there are no restrictions on how borrowers can use the funds.
If families find themselves on a strict budget they can find peace of mind in the fact that their loan payment will remain consistent. Fixed loan terms mean that monthly payments will stay the same over the life of the loan. Once a borrowers financial situation changes they can even prepay the loan balance without a penalty or extra fees. Paying down debt ahead of schedule is an excellent way to save money.
Advantages of Unsecured Financing:
- Low Interest Rates
- No Restrictions on Use
- Get Cash Immediately
- Fixed Loan Terms
- Prepay without a Penalty
Personal loans have many appealing benefits to borrowers. It should be mentioned that there are also a few downfalls that borrowers need to look out for. The interest rates on these loans can cost consumers thousands of dollars over the life of the loan. In addition, the closing costs must be paid upfront and are often taken out of the total loan amount. Many lenders will raise interest rates on the loan after a late payment.
These are common in the banking industry but are not always obvious. Consumers must take care to review all potential costs associated with borrowing money before applying.
Finding Low Interest Personal Loans
Personal lines of credit are available from many online lenders and traditional banks. The fact that this is a crowded marketplace is an advantage for borrowers. A quick online search will reveal many sources for financing at a wide range of interest rates. Consumers can start their research by writing down interest rates and loan terms from online banks on a piece of paper. A side by side comparison will help narrow down the options quickly.
Borrowers should also consider looking at alternatives to personal loans. For instance, unsecured lines of credit are available from peer to peer lending sites. This relatively new platform connects individual investors to borrowers looking for financial help. They have lower interest rates because they have fewer fees and costs when compared to a traditional bank. The entire loan process can be handled online. Peer to peer lending has become extremely popular because investors are willing to lend money to borrowers when banks are not.
Credit is available from many sources:
- Banks and Credit Unions
- Peer to Peer Lending Sites
- Online Lenders
Neighborhood banks and credit unions also offer similar unsecured personal loans. These types of loans are often extremely risky for banks. They will charge higher interest rates and have stricter approval requirement. When traditional bank financing is not an affordable option, borrowers can apply online at peer to peer lending sites to get a quick approval decision.
Qualifying for Personal Loans
There are a few factors that will hep borrowers get approved for personal loans. One of the major factors is their credit history and credit score. Banks use information provided from the primary credit reporting agencies (Experian, Transunion and Equifax) to make their approval decisions. Borrowers can be proactive in making sure their credit report is up-to-date and correct by checking it annually for errors.
In addition to credit history, lenders look closely at a borrowers employment history, current income and debt to income ratio. Each of these factors are used to judge a borrowers risk of default. Banks want to make sure they get their money back as promised. To balance this risk banks charge interest on the loans and higher interest is charged on high risk loans.
Factors that influence getting approved:
- Credit Score
- Employment History
- Debt to Income Ratio
What are families to do when they have had bad credit or do not qualify for personal loans? There are many great opportunities available to bad credit borrowers to get the money they need at affordable terms.
Best Options for Bad Credit Personal Loans
Bad credit personal loans are frequently available online from specialty lenders. These banks often charge higher interest rates and may require collateral to secure the loan. When facing a financial hardship, bad credit financing may be the only option for families in desperate need of money.
If a consumer must take out a bad credit loan there are a few pieces of advice to keep in mind.
Interest charges will become substantial over the lifetime of the loan. Borrowers are highly encouraged to pay off their balances as quickly as possible to avoid unnecessary expenses. Families need to determine whether they actually need the extra money. Can they find financing from other sources? If they do need the money, what is the smallest amount that they can survive on?
Borrowers will realize that there are many factors to consider when applying for personal loans online. The good news is that this process does not need to be complicated. Thousands of families have successfully borrowed money and been able to repay the loan with no problem.
This guide was designed to help borrowers meet their financial objectives with personal loans. Each lender is different and loans will vary. We recommend that borrowers consult a loan officer with additional questions about unsecured financing.