Once in a while we all need a financial pick-me up to solve some of the financial hurdles we inevitably come across. Some of these hurdles come in the form of basic expenses like medical bills, home improvements, weddings, family emergencies etc
A personal loan is ideal for this situations as it does not force you to put up your car, house or any other property as collateral should you default on payment as it relies on reputation.
All factors considered, personal loans have been go-to solutions in times of financial difficulties. A well-managed personal loan can save you a significant amount compared to overdrafts, payday loans and pawnshops.
Mind you, personal loans may also have drawbacks when you find yourself borrowing from devious lenders who may try to run you dry with costly service fees and inflated interest rates.
In this article, you are going to learn some of the guidelines to observe when you really need to qualify for a loan and get a lender who has the best terms and is not out to suck you dry.
The Type of Personal Loan
You should be able to differentiate the different types of loans in order to understand what you are applying for. Most of the time when people are talking about personal loans, they may misjudge the term for closed installment or unsecured loans.
Other types of loans like payday loans, auto loans, mortgages and credit cards will technically fall into the personal loans category.
When you apply for a loan that requires a good credit score and the lender realizes that yours is not high enough, they may opt to offer you a secured loan instead. This changes the nature of the loan completely because in secured, mortgage or title loans, you might be forced to put up your car or any other property up as collateral and this becomes a challenge for many people because of the stakes and intricate details of the said type of loan.
If you do agree to a secured loan, then you agree to lose your collateral should you fail to pay the loan as per terms.
Keep Track of Your Credit Score
Do not apply loans for fun, or just for the sake of trying your luck. For every financial interaction you have with monetary institutions, your credibility is put at risk. It’s up to you to make sure your credit report reads well and that requires discipline. If your ‘I’m feeling lucky’ loan application gets rejected, you will take a hit too as you will need to report the reasons of the rejected bid with your next lender. If your reasons are not legit, it could set off all type of alarm bells on your next application.
To know your score, you can make requests once a year, and revise any errors that may be on it. You can also access a free credit score from a trustworthy credit reports company. This information will help you analyze your qualifications in relation to the guidelines of different lenders.
Work on Your Credit Score
A bad score does not have to be permanent. You can take necessary steps to improve it before your next application. This can work in situations where you are not too far to the next qualification bracket. There are different credit scores and depending on the lender, you will most likely get your loan if you are above the safe limit.
When your credit is higher than excellent (above 760), you really don’t have any work ahead of you and there is no need to raise it further. However if it is below 670, you can target the 700 point mark to improve your chances of meeting loan requirements of various lenders. When possible, work on your credit score by paying all your bills and debts in time and balance your debt to credit ratio.
Find the Right Lender
If you have a less than average credit score, then you expect to be turned down by more than one lender. That should not stop you from carefully selecting who to borrow from. Reputation matters in the world of finance and personal loans shouldn’t be any different. Avoid lenders who charge high interest rates and high fees for no good reason because they will only make you cycle around the same circle of borrow and pay.
Borrow from Online Lenders with a Good Reputation
Taking your time to study the best online lender is the smartest thing to do because it saves you a great deal of time that you would otherwise spend going through one lending institution to the other.
Why Online Lenders?
Online lenders have cheaper operating costs and are much easier to interact with even at the comfort of home. They also have the added benefit of lower rates.
PersonalLoans.com for instance, offers an easy and quick way for users to be matched with personal loans through a network of lenders. The process is so easy and straightforward that you are able to access a loan of about $1000-$35000 at the comfort of your home or office, or via your mobile device. They have you covered in the event that you are looking to borrow money for any number of reasons be it medical bills, debt clearance, home improvement etc.
Avant.com on the other hand allows you to take care of your needs like clearing debts, emergency bills or simply improving your home or personal business. With Avant, you can borrow in the range of $1000-35000 all this with the highest reliability, transparency and security. The online market can also be a tricky jungle because you can fall victim to numerous scams and shady dealers who want to take more than they give.
You only need to do a background check on your lender to make sure they don’t have any past scandals or ongoing lawsuits. You can also check their rating and profile on Better Business Bureau before you making your next move.