Tag: credit score

  • Good Reasons to Take a Loan – Make a Difference

    Good Reasons to Take a Loan – Make a Difference

    Good Reasons to Take a Loan
    Everyone can find good reasons to take a personal loan, but keep in mind that no matter the situation, it must be paid back finally. 

    By Guy Avtalyon

    The personal loan is borrowed money but what are good reasons to take a loan? Where are you gonna spend that money? Would you like to make some large purchases, ease financial difficulties, or to remodel your home?

    You have to pay back this loan in monthly portions typically for the next two to six years. Yes, typically, but it might require more time to pay back it all. It depends on your financial situation and how careful you are with that financial obligation.

    Maybe it may look silly to take out a personal loan for, for instance, personal reasons, but it can be very useful in some cases. Of course, when used and paid back on time.

    Good reasons to take a loan are numerous, but it isn’t a solution for every financial situation. Usually, people take out a loan to solve improper money management. 

    One of the good reasons to take a loan can be if you have credit card debt with high-interest rates. That can be a difficult and very serious problem. The more interest you owe, your payments will be higher, and you’ll need more time to be debt-free.

    The variety of good reasons to take a loan

    As we said, if you have credit card debt and the interest rate is high it is smart to take a loan, of course, if you are qualified, so you could pay off your debt faster since the personal loan is with a lower interest rate. Hence, you’ll spend less money on that obligation. For example, a bad reason to take out a loan is to invest in the stock market. If you want to do that it is smarter to save and then invest.

    If you think that good reasons to take a loan can be your vacation or wedding, we are so sorry but you couldn’t be more wrong. 

    To consolidate debt it is a smart decision

    Actually, it is one of the most common good reasons to take a loan. For example, if you have various loans or credit cards and they all have different interest rates and balances. It might look like open doors to the trouble. To cover them all or a bigger part of them could be one of the good reasons to take a loan.

    When you take a loan and if you use it for debt consolidation, you’ll connect all of those balances into just one monthly payment. By this, the connecting of all debts will make it easier to pay off and you’ll avoid getting overwhelmed.

    A personal loan is at lower interest rates which will reduce the amount of interest you pay and the time to pay off your debt. Consolidation allows you to pay off credit cards with a clear end and shorter time frame.

    If you need money for moving expenses 

    That is one of the good reasons to take a loan if you have to relocate over a long-distance move. Costs could be very expensive on such an occasion. Yes, expensive enough to take a loan.

    A loan can help you move your furniture or other household things. But also, it can help you to buy new furniture for your new home, to pay for the service to transfer your car to another country or something similar. But before even asking for a loan, think will your income be able to cover the pay off your loan balance. This estimation will help you bypass the added burden of paying off your loan when starting a new life in a new place.

    When you have to remodel your home

    Home remodeling is also one of the good reasons to take a loan. Doesn’t matter if you need a new roof, solar panels, a new kitchen, or a swimming pool, it is smarter to take a loan for that to finish. Especially if you don’t have ownership of your home or you want to avoid a mortgage on the home you own. 

    When taking a loan for home remodeling there is no limitation on what you’ll spend the fund on. You can spend on landscaping or hardscaping, hot tub, new windows, paint the whole house, install the new heat infrastructure. There are no limitations. A personal loan is great to help in such situations when you don’t have the cash on hand right now but you’re in need.

    Instead of a payday loan

    If you’re suffering financial difficulties, you may be motivated to take out a payday loan. Be careful, payday loans are expensive and can put you in much worse situations than you were before. Therefore, a personal loan is a better solution.

    Payday loans are easy to get, but they have big risks. For example, interest rates are enormously high,  some lenders will charge you more than 500% in APR.

    Most US states have usury regulations, for instance, that limit the lenders to charge the interest of over 35%. But, payday lenders are allowed to charge their high-interest rates. Regulations on this kind of loan are controlled by the states and some states even forbid any kind of payday loans.

    For example, in California, a payday lender is allowed to charge a 14-day APR of 459% for a loan of $100. Fees on these loans are also high, they can range up to almost $18 per each $100 of loan. So, the better choice is to take a personal loan instead of this costly one.

    Good reasons to take a loan are unplanned emergency expenses

    For example, to finance funeral expenses. This isn’t a pleasant issue and the majority of people avoid discussing it. The truth is that funeral expenses can be very costly. If your family doesn’t already own you’ll have to buy a burial plot, to pay funeral home services, a coffin, and you’ll have to pay some other things which, in total, may cost you up to thousands of dollars. Remember, death is costly besides it is a sad event.

    A loan can be a crucial source to cover all costs when a family member dies. In such a situation everyone needs money quickly and if the deceased person’s savings cannot cover the expenses of the funeral some family members have the opportunity to apply for a personal loan, also such it is the ethical obligation to cover the deceased’s last costs.

    Paying medical bills is another reason to take a personal loan. The loan can be used for corrective surgery, dental intervention, fertility treatments, etc. Each of them can cost over $5.000. Added costs can be medications, aftercare, or medical travel expenses. All of them are possible, and sometimes necessary, to finance by a loan. 

    Good reasons to take a loan: you need to make a large purchases 

    Household accidents can come suddenly. If you quickly need to buy a new fridge, dryer, washer, the new computer for a job but don’t have the money on hand, a personal loan is the first aid. 

    Of course, there are so many expensive things you would like to have in your home such as entertainment things. However, it isn’t a smart decision to take a loan to buy them. Take a loan only for the things you really need for a normal life. Use it to buy the new oven, to remodel and equip the bathroom, for something that is undoubtedly necessary. For example, electronics! You’ll need months of savings to be able to buy them. Instead of waiting, you can take a personal loan and purchase them immediately. 

    Also, if you don’t have tens of thousands of dollars at disposal, you’ll take a loan to buy a new car, recreational vehicle, or boat, for example. 

    Who are lenders?

    Online lenders are set to make borrowing as easy as possible. They will tell you immediately all about your approval, if your application is approved or not, how much you can borrow, and many other things.  This kind of lender will offer lower interest rates and lower fees if they have any. Also, your approval chances are better with online lenders especially if your credit score isn’t great.

    Don’t worry, in most cases online loans are unsecured. That means you don’t need the collateral to get approved. That makes them safer. If you miss paying the loan, your credit score will fall, but your washer will stay at your home and you won’t suffer foreclosure.

  • Apply For a Personal Loan – Step by Step Guide

    Apply For a Personal Loan – Step by Step Guide

    Apply For a Personal Loan - Step by Step Guide
    Before you apply for a personal loan it’s important to consider why you need the money. Depending on that, you will choose the loan that’s most suitable for your financial circumstances.

    By Guy Avtalyon

    A personal loan is a convenient vehicle to cover a large expense if you have them but many people are confused with it and don’t understand how to apply for a personal loan. The problem is that many of them have not so good credit scores but there are some possibilities to increase their chances of approval during the process. 

    Before you apply for a personal loan you’ll have to define what type of loan you want to take out. There are several types and you have to know each of them before you start the process. 

    Personal loans can be an unsecured, secured, variable-rate or fixed-rate loan, debt consolidation, co-sign, a personal line of credit, and many other types but these are the main. A personal loan is frequently unsecured. That means it uses your credit as a gauge. To take out this type of personal loan the lender will not ask you for assurance in some other asset, for example, house.

    The second checkpoint in your deciding process before you apply for a personal loan is how much money you need.

    That amount should be suitable to cover your expenses but also, your income has to be suitable to cover the monthly charge you’ll be obliged to pay over the life of the loan. Your personal loan should be less than your maximum monthly expense but also not too small. 

    If you take out a too big loan that surpasses your income per month, you’ll jump into big financial problems. So, when deciding to apply for a personal loan you have to plan based on current income, not upon the expected. Also, applying for a personal loan that is too small will not be sufficient to cover your financial needs. So, you should carefully measure the debt you can handle, and before you apply for a personal loan.

    Select the right type of lender

    Think about what is most important for you: support or speed. You might choose banks or credit unions that are both experienced and if you are already a customer of some you might have some benefits, for example, discounted rates. The problem with these traditional lenders is that the application process may take too much time. They always require a lot of papers and that may eat your time. If you are in a rush maybe online lenders are better for your needs.

    If you choose some online lender it is probably because you need cash fast. We hope you compared various lenders before you apply for a personal loan. It is extremely important, you could find some with the lowest rate. Anyway, if you pick an online lender, you’ll have a lower rate, much lower than it is the case with banks and credit unions. Moreover, they’ll give you an opportunity to see the rate before you apply for a personal loan. In many senses online loans are unique. 

    You can compare rates by pre-qualifying, there is no need to go anywhere instead you can apply for a personal loan on a website, and what is most important for those who are in a rush, you’ll get approval in a few minutes and after a day or two, your loan will be funded.

    By selecting the right type of lender can save you money.

    Check your credit score before you apply for a personal loan

    Your credit score determines how much you qualify to borrow or you are not at all. Your chances of getting a loan will increase with a better credit score. Also, your credit score will determine the rate.

    Where to check credit score?

    Find some credit scoring service. For example, we suggest you use FICO. FICO score is a measure of consumer credit risk. It is a standard of lending in the US.

    A FICO score is expressed as a number, and it will determine your creditworthiness. That is your credit score. FICO scores are in the range from 300 to 850, where the higher the number represents a better credit score. 

    The credit score of 740 and over is excellent. Between 670 and 739 is considered as good, between 580 and 699 is rated as fair, and everything below 579 is ranked as poor credit score.

    The lenders will expect good credit and you’ll need one year of credit before they approve you an unsecured personal loan. It is smart to check your credit score before you apply for a personal loan. 

    Check the lender’s demands  

    This sounds logical but many people unveil the lender’s eligibility requirements after they apply for the loan. Don’t waste your time. If you don’t meet its requirements you’ll be rejected promptly. Apply only if you are eligible for.

    Typical demands include a good credit score where the lowest average is 640, also your annual income is one of the lenders’ requirements and you’ll need to have above $25.000. They will also ask you for your credit history of at least 3 years to qualify. The lenders will estimate your debt-to-income ratio or DTI. Lower than 43% is better.

    Before you apply for a personal loan you’ll need to have a good DTI because it has a great influence on your interest rate or loan terms.

    A debt-to-income ratio shows the debt payments you have every month divided by your total income per month. Lenders estimate your DTI to be sure that you can afford to pay a new loan. Usually, the lenders will calculate your DTI themselves but it is much better if you know your DTI before applying. For example, if you find out your DTI is high, think about paying off your other debts. Otherwise, the lender will offer you too high rates or reject your application.

    Examine lenders

    Examine everything, interest rates, fees, terms, payment options, fine print, literally everything before you sign papers, and fill out your application. Why is this important? First of all, you have to be sure how safe you are. For example, you can find in the lender’s fine print a note about prepayment penalties or late fees. That could be a great problem if there are any and you didn’t know before you signed the documents. Check your lender, ask, examine. 

    When it comes to online lenders you should be especially cautious. Choose the lender who is registered and has all information available. If some info is missing, check the lender’s credibility, it could easily be a scam and you’ll end up giving your personal and banking details to a scammer.

    Collect your documents before you apply for a personal loan

    It is always better to have all documents on hand. In that way, your applying will go faster and you’ll receive approval sooner.

    The lender in the US will tell you which documents it demands, but it will frequently be some ID, passport, driver license, or similar. Also, the lender will ask for your proof of employment. You can show your pay stubs for the last three months or a W-2 form. You have to have a bank statement also to provide to the lender information about your total income. To be able to check your credit score, the lender will ask your social security number. 

    Some lenders or online applications will require your current company’s contact info but some will ask you about previous employers.

    So, prepare all these documents to get your loan as soon as possible.

    Consider rate and fees

    The main considerations when looking for a loan should be its rate, fees, and terms. Will you choose an online lender or a bank branch is less important.  Always apply for pre-approval. Online lenders, banks, or credit unions will give you this opportunity. Based on the data you submit, you’ll know some important things such as the rate (maybe not precise but very close) or loan duration and other conditions.

    Some of the best-known national banks don’t have unsecured personal loans in offers. They have some other credit products, for example, mortgages, credit cards, etc. Credit unions are good for borrowers with a bad credit score. But to apply for a personal loan, you need to be their member first.

  • Before Taking Out A Loan Ask Questions

    Before Taking Out A Loan Ask Questions

    Before Taking Out A Loan Ask Questions
    Before you begin the whole process of taking out the loan, you have to recognize what kind of loan you need. Personal loans are unsecured and different lenders will offer them under various conditions.

    By Guy Avtalyon

    Before even starting to investigate opportunities, you have to know what to ask before taking out a loan. Your account will thank you later. The truth is that almost everyone will find a good reason to take out a loan, but keep in mind, that has to be a GOOD REASON. For example, vacations are a bad idea.

    Suppose you already asked yourself all the important questions and you got the answers on them. Did you? Well, it isn’t quite the truth, right? 

    You’re in need and in a hurry to find a lender is a more realistic situation. Before you start examining what are your opportunities or start investigating online offers, for example, you have two main subjects that you should consider: why do you need a loan and what to ask a lender.

    What to ask yourself before taking out a loan?

    Why do you need a loan? It is a personal question. Will that borrowed money help you achieve your goals? Do you really need it?
    Personal loans are tools that must help you to solve your financial problems but you must have a plan for that. As we said, taking out a loan for vacations is a bad idea, rather open target savings account for that purpose. It will take time until you save enough but paying back loans also require time. 

    But the reasonable decision is to take out a loan to pay out some debt with high interest. How much do you need exactly to borrow is crucial. Online applying for personal loans is very easy, but did you determine the exact amount of cash you need to borrow. If you add up all your debts you’ll find that exact amount. 

    How much can you afford to repay?

    Personal loans will provide you cash for your needs, but it’s important to borrow what you can afford to repay. So, before you apply you have to examine your payment options. Calculate your monthly payment. For example, you know the amount of money you’ll need to borrow. But to calculate your monthly payment you’ll need to know the interest rate and loan length. Loan length is an important question and it is often your decision. You may choose to pay a larger payment per month, so you’ll need a shorter time period to repay your loan as a whole. If you choose a longer repayment timeline, you’ll have to pay smaller amounts every month. 

    Also, the interest rates will affect your repayments. Try to find a lender that offers lower interest rates, that will save you money because if the interest rate is higher, you’ll pay more money for the interest.
    When you are searching for some online lender, always seek the lowest interest rate as possible.

    Before taking out a loan ask what is your credit score 

    Your credit score may decide if you are qualified for a personal loan at all. Also, if you are qualified for getting a personal loan, a good credit score may provide you better terms. With a bad credit score, you’ll haven’t such good terms. Yet, it’s still possible to get a personal loan with a bad credit score. 

    Some online lenders will give you a chance to see your credit score without paying and without obligation to take out a loan.

    It’s up to you to decide if an unsecured personal loan is suitable for you. Unsecured personal loans have fixed interest rates and fixed payments every month. Payments for other loans may differ from month to month and as the lifetime of your loan is approaching to the end.

    Can you trust the lender?

    When you’re in a real need and you need that money quickly, there is an army of lenders willing to deceive you and put you in a dangerous situation.
    Trustworthy lenders will look at your credit score, credit report, and examine whether you are able to repay the loan based on the ratio of your debt to income. 

    If they can check you, you can check them also before taking out a loan. For the US-based residents, check complaints reported to the Consumer Financial Protection Bureau. Also, you have plenty of websites where you can find other borrowers’ stories. Thanks to the internet everything is much easier. The trickiest part is that you’ll need to give some sensitive personal information if you want to use an online lender. 

    Check them again and again

    So you have to check them and be sure you are dealing with trustworthy lenders because some risks may occur. Fake lenders can be an extremely dangerous choice. They can promise a lot of beneficial things, but after you pay what is needed for approving the loan, you may not get what you wanted and what you paid nor what they promised. Also, if you choose a fake lender, it is possible to pay more interest or more fees. For example, some trustworthy lenders will never ask for advance fees. With legitimate lenders, the only fees you have to pay upfront are, for example, appraisals or credit checks. But you’ll have to do that only if you are taking out large loans.

    To lenders who allow anybody to take a loan, you’ll pay high interest. They will always calculate the risk they have to take or simply, they want to steal your data or money.  

    Also, be very careful, actually, you have to avoid all lenders that offer you to send the amount requested by wire. 

    Why would they want you to send money by wire? You have a credit card or check to do that. If you find such a lender you can be sure it’s a scam.

    Some of these “artists” added some words to their names that may suggest the U.S. government has approved the lender. Also, some will choose the name of some well-known financial institution but will make small, barely visible changes. That is a sign you are dealing with the false lender.

    What to ask a lender before taking out a loan?

    Ask the lender to explain all about different interest rates and to tell you how each of them could influence your financial situation and loan purpose. The other info you should ask your lender is how much you’ll need for down payments. In most cases, it will be 20% but can be changeable from lender to lender and depending on your credit score. For example, some will demand significantly less.

    Also, you would like to know what all the costs are. This means you have to know even before taking out a loan the cost of lender’s fees, recording fees, taxes, etc. 

    You need to know if you can get a loan rate lock. That is important if interest rates are rising. Of course, they are changing on a daily basis but if that change is notable maybe you’ll choose to lock a loan rate, for that the lender will charge you and you’ll need to know how much the fee will be. 

    Also, are there some prepayment penalties? They are not allowed in every state in the US, but it is important to know if your lender can charge you penalties if you pay the loan earlier. 

    Not everyone is an expert in mortgages and mortgage terms. Ask anything you’re not certain about. There is no stupid questions. You have to know all details, ask the lender for each one before taking out a loan.

    What to pay attention to before taking out a loan?

    When you need money, you may not have enough time to think about your financial future. So, you have to be careful and wise. Take care of how and under which conditions you are taking out a loan. Ask as many questions as you can. Demand the answers because they can save you money. Before taking out a loan from a lender, ask yourself what is the real purpose of borrowing and can you keep your debt under control. For that, you’ll need to know all details about the conditions under which you are taking out a loan. 

    Borrow only the amount you really need and you are capable of repaying. Lenders will try to give you the maximum loan but do you need it? Can you afford it? Always think about the future and possible problems that can arise.

  • Personal Online Loans – Everything You Need To Know

    Personal Online Loans – Everything You Need To Know

    Personal Online Loans - Everything You Need To Know
    The lending process is much faster if you are taking out a personal loan online. The whole process can be made from your home. Very often, you’ll get the funds deposited into your account within one or two days.

    By Guy Avtalyon

    Personal online loans can be easy to apply for. Online lenders usually offer low-interest rates, so it is important to note when you have to decide should you do or not that. The other benefit of personal online loans is that it is so easy to compare different offers from different lenders. Easy and quick. Besides specialized online lenders, many others are allowing you to apply for a personal online loan. Sometimes, you may get a loan under better conditions using their services.

    A personal loan from some online lender can bring money into your account instantly. Sometimes during the same working day.
    Also, for personal online loans, you can apply through solely online lenders or through some financial companies or institutions that also have online loans as an offer.

    What is a personal loan? 

    It is a loan that you, as a private person, take out for a short, limited time. It can be between two and five years. The time is fixed and doesn’t vary, which is different from the line of credit or a credit card. For most US residents personal loan amounts are from $1.000 and $100.000. This depends on your demands and your creditworthiness. Banks and lenders have individual limitations, a set of rules, on how long and how much someone can borrow for a personal loan.

    One of the characteristics of personal loans is that they are typically unsecured. And that is an advantage of this kind of loan because you don’t need to provide some kind of collateral. For example, you don’t need a house as collateral backing the loan. 

    There are many lenders that offer personal loans. Lenders could be traditional brick-and-mortar banks or online-only. They accept borrowers with various credit scores, income, and other conditions needed to get personal online loans.

    We will walk you through the process of how you can find the right lender for you depending on your income, credit history, interest rates. We will explain to you what you can’t use the loan for. Picking the right lender may save you a lot of time but, as more important, a lot of money.

    Personal online loans offer a handy solution

    For example, you need cash and you need it quickly. The main advantage of online lenders is that they can give you a quick answer to your request. So, online lenders are a quick, suitable choice, maybe more than banks or credit unions. 

    The other benefit is that online lenders usually offer lower rates but there are also some other things, very important and useful if you choose to apply for personal online loans.

    First of all, the majority of online lenders allow you to pre-qualify. That is a unique offer because you can compare rates from different lenders by pre-qualifying online and find the lowest. The other benefit is that they can fund a loan very quickly, the approval will come on the same day, sometimes in the space of several minutes. The loan will be funded inside a day or two. 

    Those are important things that make online loans different from others.

    The purposes to get personal online loans

    Personal loans are not an answer to all financial circumstances. Yes, sometimes they are simply a band-aid on incorrect money management. But it can help you if you have credit card debt with high-interest rates, for example, that is almost 25% per year. If you succeed to get a personal loan with a lower interest rate, you’ll be able to pay off your credit card debt faster and pay less on interest.
    Such refinancing is a good example of the purpose to spend your personal loan.

    But we have bad purposes too.

    Don’t try to get a personal online loan if you want to invest in stocks, for example. For that kind of purpose, it is better to save and then invest.

    Maybe the worst purpose of getting a personal loan is for vacations, expenses such as a wedding, expensive rings, or similar. Also, it is better to save for that.

    Someone would like to repair a home and think the personal loan is the best solution. Well, it couldn’t be more wrong. For that purpose, it is better to use a home equity loan since it has a lower interest rate.

    Steps to take before applying for personal online loans

    Before you start the process, decide how much money you really need. The sum you want to borrow should be based on the debt you have to cover and your income. Avoid stretching yourself too thin. If you take out a too-small loan it wouldn’t cover your needs, but also, the too-large loan will put you into paying interest on a larger amount than needed. So, you have to calculate the amount you can handle and do it before applying.
    Also, pick the right type of lender.

    Banks and credit unions take much longer to process your request than online lenders. They also require fewer documents and the application itself is less complicated. And sometimes the speed is most important in getting personal loans.

    The advantages of personal online loans

    Personal online loans have a big advantage – they are comfortable. 

    Doesn’t matter if you choose an online-only or branch-based lender. Both will provide you the loan application online and the possibility to upload verification documents. For example, you’ll need a driver’s license. Well, some branch-based lenders will require your signature on the final documents at a real branch. That is a kind of disadvantage since you would like to apply online. You will not have such a problem with online-only lenders. The whole loan application process will be done online for sure. 

    Prequalification will not hurt your credit score. Moreover, you can submit several prequalification forms to expand the list of possible lenders. 

    The next step is to complete a loan application and agreement to a hard check on your credit reports. Both types of online lenders, online-only or branch-based, require a hard credit check before you sign for a loan. Generally, these inquiries could affect your credit score. But one inquiry will have a small influence on your overall credit score and shouldn’t discourage you from applying for a loan.

    The particularly great advantage of personal online loans is that you can easily compare all your options. The benefit is that you could get the best rates and loan terms for your needs this way. 

    If you want to compare lenders, find a website that allows you to instantly classify and match lenders and loan options based on your situation, and wanted loan sum.

    Disadvantages 

    Online loans may cost you. They are not cheap and usually, they are costlier than loans from credit unions. The problem can arise with different formulas for underwriting because almost every online lender has its own. Also, sometimes it can be difficult to go through the application process for some types of personal online loans. For example, secured personal loans or co-sign loans have complex processes. 

    Also, if you want a loan under $2.000 it might be hard to find a lender since most of them have a minimum at that sum. 

    The main problem is to find reputable online lenders. You can see the ads of some lenders that they don’t care about your credit score or something else that may sound very lucrative at first sight. In most cases they are scammers. Legitimate online lenders will always check your capability to pay the loan. Yes, they will charge you the annual rate from 10% to 30%. The rates will differ based on your creditworthiness, the period of the loan, the loan amount, and, of course, the lender. 

    So, you must be very careful when choosing the lender.

    How to shop for personal online loans? 

    Here are several questions that you’ll need to find the answers for while looking for lenders.

    Online lenders examine extra factors, for example, your education, profession; but only those information related to your credit score and credit history. If you have a bad credit score, you’ll need to fix it first. But remember, it isn’t impossible to get a loan even with a bad credit score.

    What you have to know is the annual percentage rate (short APR) below 36%. That is the amount of the interest rate and all fees. If it is below 36%, financial experts agree it is reasonable for you as a borrower. If some online lender offers APR over 36% you can be certain the loan is unreasonable even if your budget can afford it.

    Do you have all your documentation ready? You can get rate quotes by providing several personal data. But when you decide to apply for a loan, lenders will expect documentation. That is ID form and proof of income, a pay stub or W-2. Still, you can easily upload all documentation, some lenders will accept screenshots, PDFs, scanned documents, or photos taken by your phone.

    The cost of personal online loans depends on your credit score. If you have a better score, you’ll pay the lower rate and less interest. Pay attention to interest rate since it can influence your complete monthly payment as well as the term of payment. If you get a longer-term loan you’ll pay less per month, but the interest amount can be bigger.