Everything About Personal Loans, You Were Afraid to Ask

Life happens. When you least expect it, some huge bill rears its head. Perhaps your pipes burst, your teen borrowed the car without asking and wrecked it before you got to add them to your insurance policy, you broke the crown on your tooth or your child’s vocational school does not offer a financial aid package. In each of these cases, personal cash loans can get you through.

Personal Cash Loans Defined

The term personal loan refers to a fixed amount installment loan that requires no collateral. Unlike mortgages, these loans are unsecured by collateral like your vehicle or house. You have a finite loan term in which to repay them and a variable or fixed interest rate. The loan term usually spans two to five years. You get a lump sum at the time you take out the loan. You then repay it month by month including interest. These payments reduce the amount you owe from the principal and the interest, but that just reduces the amount you owe.

Choose your repayment terms wisely. You’ll typically have options of 12, 24, 36, 48, or 60 months. While a longer repayment period provides a lower monthly loan payment, you will pay more interest. A shorter repayment period reduces the amount of interest you pay and can help you net a lower interest rate.

Credit cards are not personal loans even though they do not require collateral. They are revolving accounts that have much higher interest rates than personal loans, too. With a credit card, when you pay down the total owed debt, it leaves open credit for you to borrow from again.

Reasons to Take Out Personal Cash Loans

Needing a personal loan fast does not have to mean something bad happened. Just as often something happens while planning a wedding or vacation that makes it cost more than originally planned. Sometimes you or someone in your family needs an emergency medical procedure or you need help with funeral expenses because the life insurance did not cover the entire cost. Here’s a run-down on the situations and types of personal loans you’ll most commonly need.

Medical Bills

Medical expenses do not happen in a predictable manner. You could become injured in an accident or fall ill. Medical costs keep rising – even for those with employer-sponsored health plans. According to the Kaiser Family Foundation, during the past five years, health care costs went up 18 percent. To address these rising costs or an emergency medical situation, you could take out a personal medical loan or a medical credit card. Typically, the loan will prove cheaper, while the you can re-use available credit on the card.

Vacation Plans

Sometimes you think you have planned for everything with your vacation, then something happens to drive the cost up. Perhaps you already have the plane tickets, but the hotel you’d reserved had its pipes burst or experienced a fire. Now, on short notice, you need a new hotel with rates having gone up and little available. You need an emergency personal loan to fund the change in vacation costs.

Wedding Expenses

Perhaps your wedding planner’s estimates and projections came in way under the actual costs. Your reservations are made and orders submitted and now, you cake cost $1,000 more than planned. Rather than cancel the reception, you take out a tiny personal loan, knowing you can pay it back easily with the wedding money gifts.

Home Improvement Needs

It would be great if the only time you needed to renovate was when you wanted to do so. Unfortunately, pipes burst, fires occur, wiring fizzles out and sometimes, your mom or mother-in-law needs to temporarily move in with you due to a medical issue. You might need to enlarge the bedroom and bathroom doors to accommodate a wheelchair. When this happens and you are not ready, you need money fast. A home equity line of credit can help, but it takes much longer to apply for and set up than a personal loan. Perhaps you just purchased your home and have no equity, plus you have poor credit and barely obtained your mortgage. You can turn to installment loans for bad credit.

Relocation Expenses

You just landed your dream job and it is in New York City! Wow, relocation from Los Angeles, CA will cost a lot. You already thought living was expensive in Orange County. But you just saw Manhattan’s rents and now you know you need a relocation loan because you need to have somewhere to live. Plus you have to pay for the professional packers, professional movers, packing materials, a rental truck and potentially, storage fees. You can choose from one of the many unsecured personal loans online and easily re-pay the installment payments with your juicy new salary.

Types of Personal Cash Loans

Unsecured Loans

Unsecured loans cost the most since they do not require collateral. This causes more risk for the financial lender. Though you can obtain them quickly, both the fees and the interest rates typically cost more than other personal cash loans.

Secured Loans

Secured loans do require collateral, an asset the financial firm can sell to recover the money lent out, if the borrower misses payments. This could be your car or house. If you need money fast, an unsecured personal cash loan delivers it quickly. If you have time to take qualifying, wait for a secured loan since it typically offers better interest rates.

Difference Between Secured and Unsecured Personal Loans

Open-End Credit

Open-end credit like a home equity line of credit refers to a credit line that lets you withdraw money when you need to, up to the credit limit during an extended period of time. You typically do not need to pay interest on the money you do not withdraw from the account. This works best if you need small amounts over an extended period.

Home Equity Credit

Home equity credit line refers to a loan you obtain if you have built up equity in your home, apply for a line of credit that accesses it. This can take longer than a personal loan to obtain, but typically, it offers a better interest rate.

Closed-End Credit

Closed-end credit refers to a credit line similar to a traditional loan with a set lump sum on which you pay interest. You also pay back the principal. This works best if you need a large amount of money at one time. Some of these require a single payment loan which is just what it sounds like – you repay the entire loan all at once, plus interest. Beware of this type of loan. Unlike installment loans, you will not get multiple payments to make repayment easier. then you will have to repay the full amount you borrowed, plus interest, in one sum. These are common as appliance loans or consumer installment loans.

Alternative Loans to Personal Cash Loans

Depending on your need, you may have alternatives to a personal loan. These could cost you less. You should consider those choices first.

  • Educational loans: The federal government offers subsidized and unsubsidized loans for obtaining education at accredited institutions of higher learning.
  • Auto or motorcycle loans: You can obtain a specialized loan for purchasing a vehicle. They generally require collateral or a co-signer.
  • Medical loans: You can obtain a medical credit card or loan to cover lower cost treatments and surgeries. These can carry interest rates up to 25 percent.
  • Peer to Peer loans: Peer to peer (P2P) lending sites offer a crowdfunding mechanism that lets you obtain loans from more than one individual, but as a single loan. They each contribute a small amount toward the total loan need.

How Your Credit Score Affects Your Personal Loan Qualification

Whether you get any loan comes down to your credit score. It determines the “if” and it determines the interest rate you obtain. Personal cash loans, also called unsecured loans, carry higher interest rates than secured loans.

Depending on the credit reporting agency, your credit score ranges from 280 to 900. Equifax starts at 280 and ranges up to 850. Other agencies begin at 300 and range up to 900.

Anything above 760 qualifies as “excellent.” Beneath that – from 725 to 759 – you qualify as a “very good” credit risk. Higher credit scores get you better loan rates. Lower scores get you worse rates or turned down for a loan. The finance industry refers to those with very good and excellent credit as “prime” borrowers and offers them prime interest rates. That means the best interest rates. They refer to those with good to less than good rating as “sub-prime” and offer sub-prime interest rates.

How Can I Get Personal Cash Loans with Bad Credit?

Here is a truth that no bank, credit union or online lender wants you to know – you can get a  personal cash loan regardless of your credit score. It will be easier if you have a good credit score. You will obtain a much better interest rate and loan terms if you have a great credit rating. Perhaps you are sitting there thinking, “I need cash now.” You can qualify for fast personal loans for bad credit. It will be much easier to get personal cash loans with bad credit than if you have no credit.

If you experienced problems qualifying for traditional installment loans at your bank, try getting personal cash loans online. Using a site like Loanry can help you find fast loans that do not rip you off. You can qualify although you have a low credit score.

One good thing about taking out personal cash loans for bad credit is that it will raise your credit score as long as you make all of the payments on time. You will achieve an important goal in addition to affording the need that caused you apply for the loan.

Repaying a High Interest Loan

Here’s why you should avoid those really high interest loans if at all possible. You have to pay it back every month. The payments can be huge . The size of the payments can make it tough to make the payments. That causes you to pay late or miss payments totally. That further tanks your credit score. The missed or late payments remain on your record for seven years.

Even worse, the lending institution can recall your loan at any time. If you cannot pay it in full, they can take you to court. The court can order your wages garnished. Garnishment means that the lending institution gets its money before you get your paycheck. The federal and state government gets its taxes first, then the lending institution gets its funds. You get what is left of your own paycheck. It is far better to take a second job or start a side gig that earns you legal money.

Oh, the Fees

You might land a terrific interest rate despite fair to middling credit. Beware. That does not mean you got a cheap personal cash loan. Compare each loan’s total cost before choosing with whom you’ll do business. Read the loan conditions. It might include additional fees or higher fees. Look, not only at the late fees, but early repayment fees. While banks and credit unions do not want you to pay late, they also do not want you to pay early. Your extra payments and early payoffs cut into their interest payments. They want to maximize the amount of money they make for taking on the risk of loaning you money.

Also, watch for scams and fake loans. While an application fee of about $50 or less is standard, scams charge an “advanced fee” that they require you to pay before they loan you the money. The scam part is they never loan you any money. You pay the fees in advance and the so-called lending institution steals the money.

Do look for credit unions offering alternative lending programs that offer low interest rates to individuals with poor credit scores. Their not-for-profit status lets them charge lower interest rates than banks.

Improve Your Credit Score

You can determine ahead of time what loans you could get. Use a site like Creditry to obtain your credit score. If it falls beneath the very good cut off point then work to raise it. While you can still get a loan with a lower credit score, it is better if it is a higher credit score, so get to work improving it.

Step one, get your credit reports from all of the three main credit agencies. Compare the reports. Check each for mistakes. Make a list of the report mistakes and contact the appropriate agency to correct them. Each agency uses its own correction form that you can typically download from their website.

Perhaps getting the mistakes removed did not completely solve the problem. Step two becomes you doing one of three things to reduce the amount you owe:

  • consolidate your debt,
  • get financial counseling,
  • get a second job.

Step three, make your payments on time. Making just six months of timely payments can improve your credit score. It happens that fast. One of the simplest reasons that people’s scores drop is late payments. Another is missed payments. If you combine consolidating your debt with making timely payments, you can raise your credit score quickly. If you did not consolidate your loans, choose the smallest account and pay off that balance. Leave the account open, but paid off to improve your credit utilization score.

Personal Cash Loans for Debt Consolidation

It may sound silly to take out a loan to improve your credit score, so you can obtain better loans. But it all makes sense when you learn what a debt consolidation loan does. It lets you pay off your loans while saving money. Right now, if you have poor credit, you probably have lots of credit cards or loans with high interest rates.

A consolidation loan lets you obtain the money to pay off all the other credit cards and loans. It leaves you with a single loan to pay at a single interest rate. Start the search for personal loans for bad credit near me with local lenders. They typically prove more friendly to those with low credit scores who live in their community. As long as your leave your other credit cards open, you can quickly raise your credit score. That is because you will reduce your credit card utilization.

That term refers to the relationship between your total credit limit and the amount you use of the credit limit in a single month. Consolidating your debt reduces your credit utilization which results in a better credit score since you no longer have as many credit lines in rotation. Every month your creditors report to the credit bureaus receive a monthly update on your credit utilization.

Financial Counseling

Meet with a financial advisor or counselor to learn how you could budget better and reduce debt. Discuss your current credit situation and set financial goals. You might think this does not dovetail with quickly obtaining money, but if you begin financial counseling and learn how to manage money better, you probably will not need future loans.

The advisor or counselor helps you develop a customized plan of action to improve your credit and your finances. They can assist you in the completion of your personal loan application, too. The advisor can teach you how to use tools like a personal loan calculator so you can determine ahead of time how much you could borrow without overextending yourself.

Get a Second Job

Okay, get a job if you do not already have one. Do not borrow money. Do not take out credit cards. Work. It is that simple.

If you already have a full-time job, take on a second job. Work weekends, nights, early mornings, whenever the hours are available from a legal employer.

If there are no jobs available near you, find work online. Just like finding unsecured personal loans online, you can find work online from places like Freelancer, Textbroker, WriterAccess, Upwork and others. You can make appointments for people, answer phones, do data entry and more.

Before you can qualify for most personal loans online, you need decent credit. That means paying down what you owe.

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Obtaining Personal Cash Loans

Personal loans range widely in their amounts. The typical range starts at $1,000 and goes up to $50,000. That does not mean you will qualify for a $50,000 loan. It means some financial institutions cap their loan amounts at that level. You may only qualify for a $2,000 loan, depending on your credit score.

How Loanry Helps

Loanry connects people in need of capital with an array of available financial lending institutions. Regardless of what you need a personal loan for Loanry may help you find a trusted lenders who offer it.

We also provide free tips and tools, like this blog, so you can learn about, traditional-term business loans, or find out if it’s a good idea to pursue an emergency car repair loan or refinance those student loans. Loanry provides financial access and education so you can make the right choice for you. Here are some lenders we suggest you consider.

Personal Installment Loans and Personal Cash Loans

You might find it confusing, but personal installment loans and personal cash loans are not the same thing. This article centered on installment loans. You should visit Loanry to find a lending institution that offers them. On the other hand, a personal cash loan bears close similarity to a payday cash loan. It provides you quick, often same day or next day cash, directly into your bank account. You can apply for and obtain these online.

Both Loanry and Cashry offer a simple process that may help you find a lender who would fit your needs. Let’s be frank. You are not promised a loan from these financial institutions. But you just might avoid pounding the pavement to locate lenders who loan to those with bad credit or a defaulted student loan or an eviction.

Once you get connected with the lenders whose requirements you meet, you can start the application process. Neither Loanry nor Cashry lends you the money. Each is a loan mall. We help you enjoy personal loan shopping from home. Our other goals include helping you educate yourself on credit building, loans, credit cards and how to develop healthy finances. Remember, we do not extend loans. But, we might help you in obtaining one.

You’re Ready to Apply for Personal Cash Loans

You found the lenders to which you want to apply. Also, you obtained help from a financial advisor to complete the applications. And you got pre-qualified for a loan! Go you!

Now, you get to prove you are you. Sounds funny, but lenders require a plethora of documents before they will hand you the money. You need to prove your income. Usually this means presenting pay stubs or evidence of direct deposits to your checking or savings accounts.

You also have to prove your identity. You will need your birth certificate, driver’s license and Social Security card. The lender may also require a passport. This protects you and the bank from identity theft.

Knowing what documents you will need to provide, you can get them together ahead of time. Having these ready can shorten your waiting period while the lender makes a loan decision.

Be prepared for the fees, too. You will pay an application fee with each loan application. Even if you get turned down for a loan, the bank gets to keep your application fee.

Conclusion

By conducting your loan search properly and targeting lending institutions likely to loan to someone of your credit history and credit score, you can quickly obtain the loan you need. Your financial future is yours. Let us help you manage it wisely.

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