A Guide to Personal Loans in California: Loans 411
If you have found yourself in need of personal loans in California, but do not fully understand them, do not fret. We have you covered. In this article, we will talk about personal loans, how they can be used, how you can find them, and even how to prevent needing them in the future.
What are Personal Loans and Personal Installment Loans?
Personal loans California residents can get are really just plain and simple loans. You borrow money from someone, be it a friend or a financial institution, it is a personal loan. These can go anywhere from a few hundred to tens of thousands of dollars. Generally, though, they average between $500 and $1,500.
A personal installment loan is a type of personal loan. You borrow money from a lender and pay it back in monthly installments. In my humble opinion, personal installment loans are the best type of loan you can get. With many other types of loans, you get short repayment terms and high interest rates. Personal installment loans offer some of the longest repayment periods- months or years- and much lower interest rates- as low as 6%. In short, they are much less stressful to me because you do not have to rush to pay them off. If you need a loan, I would suggest looking for a personal installment loan before applying for others.
Before applying for personal loans in California one needs to know the pros and cons:
-You can use them to pay for things you need now that you cannot otherwise pay, like medical expenses or moving expenses.
-If you make timely payments, you can improve your credit score.
-Timely payments can also make you eligible for larger loans when you are making a larger purchase, i.e. a vehicle.
-This may seem like common knowledge, but I have actually known quite a few people that did not understand interest means paying back more than you borrow. If you were unaware of that, you know now.
-Missing payments can completely destroy your credit. It can also mean court dates, being sued, losing property, or more. If you borrow money, you need to repay it on time to prevent any additional issues.
The Different Types of Personal Installments Loans
There are two basic types of personal loans: secured and unsecured. Let’s break them down:
A secured personal loan is one that requires some type of collateral. That may be a piece of property, like a car, a home, or even investments.Basically, you temporarily give your lender ownership rights to that collateral until you have fulfilled your agreement. This collateral benefits the lender because if you do not pay your loan, they can take possession of your property. They can then sell it to get their money back.
It is also beneficial to the borrower because putting collateral up can help you get approved and possibly even get approved for more. The downside is that until you pay off the loan, you can do nothing with that property. For example, if you used a vehicle for collateral but would like to sell it, you will have to wait until you repay your loan and own it again. It is also important to note that if you do not repay your loan, the lender has every legal right to your collateral. So unless you don’t mind losing it, be sure to pay your loan as agreed.
An unsecured loan is one that does not require any collateral. The lender basically loans you the money just on your promise to repay the loan. As the lender is taking a greater risk, these are harder to get approved for and you might not get approved for a large amount. The higher the risk, the tougher the application and approval process will be.
If you are thinking that you will not lose anything if you do not pay back an unsecured loan, think again. Though you are not putting up any collateral with these, the lender can still pursue legal action. The result of that could mean you losing even more- and paying more than your original loan. And it can affect your credit. The bottom line is that you should be sure to pay back an unsecured loan, as well.
What Can I Use a Personal Loan for?
You can use personal loans for many reasons. Vacations, bills, debt consolidation, moving, vehicles, real estate, medical bills, even shopping sprees can be covered by personal loans. Having said that, here is a word of warning: being irresponsible with a personal loan is going to get you into trouble.
Let’s take that shopping spree, for example. Taking out personal loans in California just because Hollister is having a huge sale, or because you see an expensive pair of shoes you want is probably not a good idea. On the other hand, let’s say you are starting a new job that requires a professional wardrobe. You check your closet and find nothing but skinny jeans, the outfit that you keep for funerals, hoodies, and tank tops. Obviously, this is not going to cut it at your new job. If you need clothes in a situation like this and will not have any money until you get your first check, it is probably okay to get a personal loan. Well, as long as you have already been hired.
Do you see the difference? Shopping sprees for the fun of it are not a bad thing, but that is kind of an irresponsible thing to get into debt over. Instead, save up for a while, sell your old clothes, and then treat yourself to a guilt-free shopping spree. However, if the shopping spree is an investment into your future, it is not so irresponsible. The key is to simply think through the reason for the loan first and determine if it is really necessary.
How Can I Qualify for a Personal Installment Loan?
Qualifying for personal loans in California is the same as anywhere else. Lenders will usually check your credit score and/or report. Some will go no further if your credit is not good. However, there are some that give bad credit a chance, depending on other things like income and references. What the lender requires often varies from lender to lender, but you can generally expect the aforementioned items.
Where Can I Find a Personal Installment Loan?
Ready to find personal loans in California? It is easier than you think. If you prefer in-person applications, you can apply through your local banks, credit unions, and other financial institutions. For a list of personal loans in your area, simply Google “personal loans California”.
A much simpler way, however, is to apply for secured and unsecured personal loans online. Loanry is available to help you find a lender who offers personal loans in California to residents. If you are presented with a loan offer, be sure that you shop loan rates between them before you choose.
Wise Steps to Take After Getting Personal Loans in California:
- Read your loan agreement. Now, read it again. You need to know exactly what you signed up for. You should have already read it before signing it, but read it again anyway.
- If you have any questions, ask them, even if you have already signed.
- Mark your payment dates in your calendar or planner. Do not miss a payment because you do not know the date.
- If, for any reason, you will be late making your payment, call your lender immediately. They may be able to help you and keep it off of your credit. Even if they cannot, trust me when I say it is much less frustrating for you to call them than it is to have them calling your phone until you finally decide to answer.
- This last step is simple: repay the loan.
What Can I Do to Prevent Needing a Personal Installment Loan?
There are times in our lives that a loan simply cannot be avoided, and that’s okay. Needing help is not a weakness- it is a human characteristic. Regardless if the loan is to start a business or it is to pay your electric bill does not matter. When it is needed, it is needed- bottom line. And sometimes, this need comes out of nowhere or in amounts so large that we cannot handle on our own at that time.
Then, there are times that you can completely avoid the need for a loan, but it requires diligence, will power, and a great amount of responsibility. And it needs to happen consistently, not just when you are already in trouble. In fact, by that time it is too late. Following these steps year round can help you slide some cash away for a rainy day:
The Dreaded “B” Word
That’s right- budget. If you want to get anywhere in life, you need a plan. A budget is a plan for reaching your financial goals and keeping your head way above water. It is about telling your money where to go instead of the other way around. By being clear about what you are bringing in and what is going out, you can easily see if you need to make more or you need to cut down some.
Here is a big point though: you should give every single cent a home before it comes in. The home you give it is up to you, but it all needs a home. What do I mean? You likely already set aside your electric bill money, your grocery money, and so on. (If you don’t, you should really start.) But what do you do if there is anything left? Letting the remainder of your check just fall to random expenses is not going to help your finances, at all.
Let me break down what I mean. Below is an example of how one might budget a $1,000 check:
Power Bill- $200
Car Insurance- $80
Movie Night- $60
Before we move on, understand that all of these numbers are fictitious. Your bills may not look a thing like that, but you can simply plug the numbers into your budget. Also, notice that I added clothes and movie night to the list. Your budget can consist of anything that is important to you. You do not have to leave out the fun- you just need to budget it in.
Now, if you add these numbers up, you will have a total of $910. With a $1,000 check, this means you will have $90. What would you do with it? There are a lot of answers to this question, all preferential. Regardless of the answer, it needs to be added to the budget. If you plan on saving it for vacation, add it to your list. Even if you plan on blowing it on pizza and beer, put it in your budget. Obviously, the smart thing would be to save it, but you are free to do what you wish. Just make a plan for it all.
Make Saving a Lifestyle
Saving does not have to be event-related. It is something you can do every day. Saving really is a mindset. Understand, though, that saving
does not mean living in as if you are one step from being homeless. It simply means prioritizing where your money goes. If you value date night with your spouse every Friday night, take your lunch to work with you instead of eating fast food. If paying for your child’s karate lessons every month is a top priority, you might cook more every week. You can save while enjoying your life. You just have to decide what you really want to enjoy and what really does not matter.
Stop Waiting Until the Last Minute
One thing I absolutely despise is shopping at the last minute. If I know that I need it, I will do everything in my power to get it early. That prevents me from having to fight crowds and pay inflated prices. Here are some of my tips for shopping early:
Let’s be honest, Christmas comes every year, on the same exact date. It does not change. It will be here December 25th of this year and every single year. That is common knowledge, so I have to wonder why people act like it surprises them every year. They fit all of their shopping into a matter of weeks- maybe a month or two. Then, they run around like chickens with their heads cut off possibly having panic attacks.
Even worse, with everyone running around like this, there is an intense tension between all shoppers. They get rude and impatient with one another- which, you know, is totally what the season is all about. The solution- start at the beginning of the year. Have you ever walked into your local retailer two days after Christmas and see an item you paid $100 for knocked down to $50 or less? Yes, it can be frustrating, but you can also use it to your advantage. Start shopping ahead with those sales. Check the clearance aisles all year long. Put $20 up every week so you are ready when you find a good sale. It’s not that you will have nothing to buy around Christmas time, but shopping early can help you make your Christmas budget.
-“Back to School” and Halloween:
These holidays are very much the same. You may not know everything your kids will need the next year, but things like notebook paper, pens, pencils, and other common items are on pretty much every list. About a week after the back to school sales, you can find these items at a fraction of the cost. The same is true with backpacks and even Halloween costumes.
Those are just a few tips for you to save on Halloween and Back to School. I could go on about this for hours, but I digress. If you really think things through, you will find many ways to save.
When searching for personal loans in California, do so with as much diligence as you would pick a pediatrician for your baby- not that the loan is as important as your baby. It just needs to be taken seriously. It can be an overwhelming process to find the loan you need. Let Loanry help you find a lender that suits your situation.
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Brandy Woodfolk is an educator, home business owner, project manager, and lifelong learner. After a less than stellar financial upbringing, Brandy dedicated her schooling and independent studies to financial literacy. She quickly became the go-to among family, friends, and acquaintances for everything finance. Her inner circle loves to joke that she is an expert at “budgeting to the penny”. Brandy dedicates a large portion of her time to teaching parents how to succeed financially without sacrificing time with their little ones. She also teaches classes to homeschooled teenagers about finances and other life skills they need to succeed as adults.
Brandy writes about smart money management and wealth building in simple and relatable ways so all who wish to can understand the world of finance.