PERSONAL FINANCE BLOG

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I Need a Loan
6 Apr 2019

I Need a Loan

If you need to borrow some money to pay for credit card debt, medical bills, or repairs for your vehicle, you may say to yourself, “I need a loan.” While it is easy to determine how to get the money you need, it’s a challenge to know which loans are best or how to procure them. Most people focus on payday loans online because they give you quick approval times. However, these loans are a challenge to pay back within two weeks and may end up putting you in a situation where you need to borrow more continually.

Instead, you may want to focus on getting an unsecured personal loan, which means no collateral is involved. You can get a wide range of money, usually up to $50,000, and you make fixed payments each month (though you can pay more than the fixed amount). You usually get two to five years to pay back the loan, though the terms and rates are going to vary depending on your credit.

Credit Score

Before you focus on getting any loan, you need to check your credit score because a higher number is more likely to get you approved and get you favorable rates.

Scores of 720 or better mean you have excellent credit while scores between 630 and 689 mean you have fair/average credit. If your score is less than 629, it means you have bad credit. It’s best to build your score up before applying for loans when possible. You can change your credit score for the better by making all your payments on time and reducing the amount of credit you use based on the credit limit of the cards.

“I Need a Loan” Means Shopping Around

If you’ve told yourself, “I need a loan right now,” you may be tempted to go with the first company that approves you. However, you should shop around to get the best loan interest rates. If you can, it’s best to get prequalified for a loan, which means a lender has already stated interest and has claimed that you are creditworthy enough for a particular amount.

However, everyone isn’t going to pre-qualify for a loan. You may have too little income, no work history, or a high debt-to-income ratio.

You can still shop around for the best loan rates, even if you can’t get pre-approved. Check with your local banks and credit unions. If you are a member of a particular bank, it is best to start there; they know you, and you have established rapport with them, so they may be more interested in helping you.

Consider Other Options

If you have time, you may want to consider other options to get credit before getting a personal loan. You may qualify for a credit card, especially if you have good credit. If possible, try to get one that has zero-percent interest for the first year (or more). That way, you can pay off the debt within that time frame and not rack up a lot of interest fees.

If you can’t get a credit card or don’t want to do so, you may want to consider a secured loan, which uses something you own as collateral (such as a house, car, or 401k). Sometimes, it’s also possible to add a co-signer to the loan. A family member or close friend can sign the agreement to pay back the loan with the listed terms; if you fail to pay, the lender can call the other person to pay back what you owe. If you’ve told yourself, “I need a loan” to cover debt or other situations, you have a variety of options available to you. Here are some other articles you might find interesting:

Payday loan with a prepaid debit card – how to get one when you don’t have a bank account
Your guide to credit cards for bad credit with no deposit
Personal installment loans and how to get one with Jora Credit
Lift lender review