Personal Loans – Low Cost and Poor Credit

What is a Personal Loan?

If you are not very familiar with loans in general, you might have no idea what a personal loan actually is. It’s undoubtedly a term you’ve heard before, but what makes a personal loan any different than other types of loans? And — most importantly — how do you actually go about getting one?

A personal loan is an unsecured loan that has fixed payments. This type of loan can be used for any need. It is important to understand the personal loan characteristics, listed below, before applying for a personal loan.

• Since personal loans are unsecured, rates are higher.
• Personal loans have a fixed term.
• Sometimes, a revolving line of credit is offered.
• There are no tax benefits.

According to Kiplinger Magazine, personal loans are gaining popularity with credit-crunched consumers who want to consolidate debt or pay off big-ticket purchases with simple-to-use loans that don’t pack any surprises.

How Much Money Can You borrow With a Personal Loan?

The amount of you money you can borrow with a personal loan depends on lots of things. You can’t necessarily just walk into the bank and ask for a specific amount — first, you’ll have to fill out a credit application to find out how much money the lender is willing to give you. So for example, if you need $5,000, there’s a chance you can only get approval for $3,000. But then, there’s also a chance you could be approved for much more. The first step is to let your lender know how much you need, and they’ll take it from there. As long as your credit is good, most lenders will do all they can to make sure you can borrow the amount you’re asking for.

Can you get a personal loan after bankruptcy?

Yes, if you have declared bankruptcy, you can still get a personal loan. However, if you get approved, you will most likely have very high interest rates or other conditions. It also helps if you have a job because lenders rarely give out unemployed personal loans regardless of whether or not a person recently filed for bankruptcy.

Lenders are hesitant to let individuals who have declared bankruptcy get a personal loan because seeing a ‘declaration of bankruptcy’ on a credit report means the borrower has previously walked away from debts. Additionally, it may be easier for the borrower to fall back into debt. The borrower may not think about whether or not getting a good credit rating immediately after declaring bankruptcy is in their best interest. Borrowers may also be so concerned with getting approved for a loan that they do not pick the right one to meet their needs, landing them right back in debt.

Personal Loans and Credit Scores

Getting a loan after bankruptcy and with bad credit is possible, but fixing that credit score will be essential for future loans or credit, including refinancing. If you are approved for your personal loan, pay back on time and try to make payments for more than what you owe that month. After several months fof making payments on time, you can ask your loan company to refinance your loan.

Can You Get a Personal Loan if You Have Bad (or Terrible) Credit?

If your credit is bad, you may not be able to get a personal loan. According to FICO, a score of 600 or below is poor while scores of 700 and above are generally considered good. Find out your score before applying so you’ll have a good idea of whether or not reputable lenders might work with you. Check with local banks in your area first, and if it appears that none are willing to extend credit to you, you might have to deal with a bad credit lender to get your money. Before you make the decision to get a personal loan through a bad credit lender, make sure you definitely need the money. If the money is for something that isn’t urgently needed, it might be best to put off borrowing it until you know that your score has improved enough so that you can deal with more reputable lenders. Bad credit lenders might loan you your money regardless of your credit score, but they will do so at very high rates of interest, which will ultimately make it harder for you to pay the money back.

Remember, a company will charge higher APR for a terrible credit personal loan than what poor credit score credit cards can give you. Personal loans for terrible credit can charge very high interest rates and this should be kept in mind. The New York Times recommends going to your local credit union who offer credit builder or rebuilder loans, whereby the borrower saves a little bit on the side of the loan to eventually use as collateral.

Is It Possible to Get Personal Loans Without a Bank Account?

Believe it or not, it’s possible to get personal loans without a bank account. However, the reality of the situation is that you will most likely experience difficulty in getting loan approval if you can’t show proof of a bank account. If you don’t have a bank account and need to apply for a personal loan, here are a few factors that will work in your favor:

• Proof of Employment. Personal loans for unemployed people are generally hard to come by, but if you have a job, you might be able to get a loan with or without an account at a bank. Being able to prove that you’ve been at your job for several years will increase your chances for loan approval even more. According to Bills.com, the fact that you’ve worked at the same place for a long time will make potential lenders believe that you’re reliable and trustworthy — which of course also means there’s an excellent chance you’ll pay back whatever money they lend you.
• Excellent Credit. Having an excellent credit score can make your lack of a bank account seem pretty irrelevant in the eyes of most lenders. However, it’s important that you also have some credit history. There are plenty of people who have good credit, but only because they’ve never used credit, so they haven’t had a chance to mess it up yet. This won’t help you. It’s important that you have good credit and also some type of credit track record for potential lenders to go by when deciding to whether or not to give you a personal loan.
• Try to Get a Bank Account. There are many people who shy away from applying for bank accounts because they don’t believe they’ll get approval. The reason behind this belief is usually related to the fact that many banks have started doing credit checks before opening accounts, and people with bad credit don’t want to deal with the possibility of rejection. There are actually lots of banks who still do not perform credit checks, and you could do some research to find out which ones don’t. Also, many banks that perform credit checks for checking account approval don’t bother when people open savings accounts. Open up a savings account first and deposit money into it on a regular basis. After six months to one year of doing this diligently, the bank you are using might allow you to open a checking account based on your good money saving habits.

Tips for getting a low cost personal loan

A low cost personal loan is the best type of loan you can get. Low cost loans normally come with low interest rates that are fixed and usually require no collateral or money down. If you want a loan like this, there are a few different ways to help ensure your application will be approved.

Keep Your Credit Score High

The average lender would prefer to give a low cost loan to someone with a good credit score. You can’t just walk into a bank and expect to be approved with bad credit if you need 3000 fast. Before filling out your loan app, check your credit score so you’ll know in advance if you have a chance at getting your money. According to Experian, an excellent credit score is 750 and above. If your score is below that, you have the best chance of getting your money if you work to raise it.

Getting a Loan with Less than Perfect Credit

You still have a chance of getting a low cost loan if your credit is not perfect as long as your credit report shows that you pay your bills on time or happen to have a low debt to income ratio. It’s worth applying if you fit this description. However, chances are best that you’ll receive the lowest cost on your loan if you have a high credit score in addition to these things. In order to get a large personal loan like a 25000 personal loan you would have to have very good credit.

Getting Low Cost Loans with Poor Credit

If your credit is below 600, your only chance of getting a low cost personal loan revolves around finding a cosigner with good credit to sign with you. This will make the bank feel secure about giving you money because your cosigner will pay if you don’t. The FTC reports that more than half of the people who cosign on loans end up paying, so think carefully about that before asking someone to sign. If you can’t find a cosigner, you might have to settle for a payday loan with high interest as a last resort.

Personal Loans For Unemployed People

Needing money when you don’t have a job is a terrible situation to be in. The reality is that the majority of lenders are not going to want to work with you when they’re not sure you can pay them back. So what do you do if you need information on personal loans for unemployed people? Does such a loan even exist? Actually, it does, but there is a right way and a wrong way to go about obtaining one.

The Wrong Way to Get an Unemployed Loan

First of all, don’t fall for scams. You will absolutely come across dozens of ads both on the Internet and probably inside your local newspaper advertising too-good-to-be-true personal loans. Unemployed, desperate people make the best prey because they want so much to believe that they can get the money they need that they’ll fall for anything. You should also try to avoid companies offeringunemployed personal loans with astronomically high interest rates if at all possible. If you don’t have a job, high interest loans might be the easiest to obtain, but explore other options first before you agree to pay back twice as much as you borrow.

The Right Way to Get an Unemployed Loan

Shop around. Personal loans for unemployed people are out there with decent terms, but you have to look for them. Go with the lowest interest rate you can find, and if you have some type of collateral to offer up, do it. Having collateral will give you a better chance of qualifying for a loan. If you find a lender with decent terms who is hesitant to loan you the money, see if you can get a cosigner. It might be hard to convince a family member or friend to agree to pay if you don’t, but a person who knows you well enough and understands that your intentions are good might surprise you by agreeing to do it. Just don’t let it ruin your relationship with another person if you ask them to cosign and they decline. You can’t blame people for not wanting to stick their neck out when it comes to anunsecured unemployed loan, especially if they know for a fact there’s no way they could pay back the personal loan. Unemployed or not, you need to keep your word that you’ll pay back the loan if someone does sign with you to ensure the stability of the relationship.

Personal Installment Loans

You have probably heard banks advertise for personal installment loans, and you might have asked yourself how these loans differ from basic personal loans. There is really no difference between the two. With an installment loan, you borrow a certain amount of money from a lender and are expected to pay it back plus interest over a specified period of time. Installment loans generally mean you’re making monthly payments, but there may be some lenders who will allow you to make payments more or less often than that. You can get installment loans through local banks, credit card companies, and other private lenders.

Credit Requirements for Personal Installment Loans

If you want to get the best possible terms on your installment loan, you need to have good credit just as you would with almost any other type of loan you might apply for. Having bad credit doesn’t necessarily mean you can’t get an installment loan, but it does mean that you can expect a higher monthly payment and a higher interest rate. If your credit is below 600, which Equifax considers to be in the very poor credit range, then there’s a good chance you will not be able to get installment loan approval at all from any reputable lender. The lenders who will offer you loans with terrible credit will most likely charge you very high interest rates. If your credit is above average but not quite excellent, you still shouldn’t necessarily expect approval on something like a $50000 personal loan.

Tips for Getting Good Installment Loan Terms

There are a few ways you can increase your chances of getting the most favorable terms possible when you apply for a personal installment loan. Before hastily heading out and borrowing the money, sit back and wait a bit so you can watch the interest rate fluctuations with the lenders you are considering. It’s best to borrow the money when the rates are at their lowest. Doing this doesn’t necessarily mean you’ll qualify for the rock-bottom rate, but it does mean you’ll probably get a lower rate than you would normally when interest rates are higher. It’s also smart to shop around. Don’t settle on a specific lender just because they’re who you’ve always done business with in the past or they happen to be closest to where you live. If you settle on lender A without even checking out the terms lender B might offer you, you could be doing yourself a disservice. If you’d really prefer to use the same lender you always have, get the loan terms another lender has offered you in writing and see if they’ll match the rate for you. There’s a good chance they will just so they can keep your business. If you are currently without a job, you may need to wait until you have one before you apply. Even with good credit, many banks won’t offer unemployed personal loans.

What is a Subprime Personal Loan?

At some point, you may have seen an advertisement trying to get you to apply for a subprime personal loan. You’re not in the minority if you don’t know exactly what this is and how it differs from a prime personal loan. Subprime loans are actually geared more toward people with bad credit rather than people with good credit who can likely qualify for prime loans. Prime and subprime are terms that refer to the interest rates these loans carry. With a subprime loan, your interest rate will be much higher than the current average interest rate that a person with good credit might be able to secure. If you are lucky enough to get approval for a prime personal loan, your interest rate will be right around the current average — not inflated to compensate for a lack of good credit.

I Need Money Desperately! Is a Subprime Personal Loan a Good Idea?

If your credit is bad and you need money urgently, a subprime loan might actually be your best option as long as you do fully understand the terms and have thoroughly read the fine print so you know what you are getting yourself into. However, if there’s any possible way that you can get a prime personal loan, you should do that instead. It’s a good idea to shop around and find out what you can qualify for with various lenders in the event that you might be able to get a more favorable interest rate than what you’re likely to secure through going the subprime route.

I Need to Refinance My House. Can I Do It With a Subprime Loan?

If refinancing your home would save you from foreclosure, you might be able to do that through a subprime loan — particularly if your credit is bad and no other lenders offering lower interest rate loans will go through the refinancing process with you. In fact, the U.S. Department of Housing and Urban Development has reported that most subprime loans are actually taken out for the purpose of home refinancing.

I Would Prefer to Avoid a Subprime Personal Loan. What Are the Steps to Take to Get a Loan Offering Better Interest Rates?

If you can put your money needs on hold for a while and work on building up your credit score, you may be able to bypass subprime loans and get a loan with a good interest rate. You can keep tabs on your score by ordering a free credit report from one or all of the three major credit bureaus – Experian, TransUnion, and EquiFax. You are entitled to a free report once a year. According to MyFICO, you should be able to qualify for most prime loans if your score is around 700. There’s also a chance your score may vary slightly between the three credit bureaus, and you would be better off basing your chances on loan approval going by the lowest score you have.