For the most part, a personal loan online doesn’t get as much exposure as credit cards because they usually don’t have as many rewards attached to them. However, Americans do turn to these financing options when they need money quickly. Most people don’t know how to shop around to find the best personal loans or find the right companies with which to work. Of course, the quick answer is to ensure you’ve got good credit, research companies, talk to the financial institution, and compare options carefully.
What Are the Best Personal Loans?
Primarily, a personal loan is considered an installment loan. Therefore, it’s not a revolving credit line like a credit card. Instead, you take out a particular amount of money and pay it back using monthly installments that are predetermined by the lender. You also pay a specific interest rate based on the terms of your agreement and must pay off the loan in the time allotted.
You can find two personal loan types, including unsecured and secured personal loans. With an unsecured loan (signature loan), you can borrow money without offering any collateral. Secured loans require you to put up collateral, such as a car that you want to buy with the loan. The lender can seize that collateral if you default on your loan. Because something tangible is involved to cover the debt if you don’t pay, secured loans are likely to have lower interest rates than unsecured loans.
However, if you’d like to pay off all your debts and have one monthly payment each month, unsecured loans can also be helpful. It’s just a matter of finding the right one.
Know Your Credit Score
Before you shop for a personal loan, it’s best to know what your credit score is. While interest rates can vary widely depending on the lender, it also depends on your credit score and credit history. If you have a lot of debt and have missed a few payments, the lender is likely to wonder if you can pay back this loan.
These late payments and high debt ratio would put you in the bad credit category, and make it difficult for you to take out a loan. If this is the case, then you would do best to look for bad credit loans or payday loans online, which are more tailored for low credit scores and higher risk customers.
Regardless of the factors the lender considers, you aren’t going to get the lowest interest rates if you don’t have excellent credit. Only about 36 percent of Americans fall into the category of excellent credit. You can check your credit score using a variety of options, and you can also get your credit report for free once a year from any of the three credit-reporting bureaus. It is a good idea to get this report and check it for any mistakes.
Every application you fill out for a personal loan is considered an inquiry against your credit report, which lowers your score a bit. While it’s usually nothing major, you can lower your scores significantly if you apply for multiple short-term loans from multiple lenders at the same time. If you’re worried about the effect this might have on your credit score, you can research no credit check loans. For these loans, the lender does a soft credit check only, which won’t appear on your credit score.
It’s best to research companies first without applying. Sometimes, the lender lists its credit qualifications, such as the minimum credit score you need to be approved. You can also call the lender directly and ask what you need to qualify for a personal loan no credit check. At this time, you may also want to ask about interest rates and other pertinent information.
Going online can help you find the best personal loans for your needs without having to talk to a lender that might push for a loan you’re not ready to undertake. Most lenders have websites with the necessary information, such as what you need to apply for the loan, what the qualifications are, and the terms of the contract. This information can help you compare lenders before choosing one with which to work and gives you more insight into the lender. Here are some other articles you might find helpful: