The Importance of Comparison Loan Shopping Explained

Loans help consumers every day in a variety of ways. They help consumers to make investments. They help consumers to start their own businesses. They help the consumer to cover expenses or purchase a home or vehicle. At one time or another, most individuals will take out a loan to make their financial goals a reality.

Borrowing is commonplace in our economy. However, a consumer should never borrow without conducting adequate research. Loan shopping is essential to finding the best borrowing offer available. Consumers need to compare the offers of different lenders. Agreeing to a particular loan offer without adequate research is never a good idea.

We encourage consumers to learn as much as possible about loan shopping before they get started. Loan shopping is an essential part of the borrowing process. The following is some essential information to help you shop for the best loan out there.

Importance of Comparing Offers Between Lenders

A loan is just like any other product. You have numerous options to choose from. This means you need to shop around to find the best option. It’s good to frequent loan places where different offers are available. These offers can be found both online and offline. Loan shopping is essential before borrowing to optimize your finances.

The terms of the loan you take out should be in line with your goals. They should also be in line with your long-term financial plans. This is why loan shopping is so important. There are a lot of loan products out there that are not going to put you ahead. They may even set you back.

Find the loan that best matches your situation. Do the best you can. Over the long term, your efforts will pay off. If you’re devoted to borrowing smart and paying off your loan on time, your credit score will improve. This will lead to improving loan terms for you in the future as lenders vie for your business.

It’s now time to get started with your loan shopping. You can use the information provided below to find the best borrowing option out there. There are a lot of loans out there. However, they can vary widely in terms of key factors like interest rate and monthly payment. For example, personal loan cost depends on if he is a secured or unsecured loan type. Evaluating all these factors is important.

Understanding the Terminology

If you want to comparison shop for a loan, you need to understand significant loan terms. There are some key vocabulary terms that go along with borrowing a loan. You’ll struggle to effectively compare loan offers if you don’t understand these terms.

You might already understand what these key loan terms mean. However, it never hurts to freshen up your vocab and go over some key concepts of borrowing again. The following are 12 terms to familiarize yourself with before you get started.

Amortization

Amortization is a simple term that sounds more complicated than it is. You might hear the term amortization when you’re shopping for a loan. The term simply refers to repayment where payments are equally divided up according to how much the borrower owes. Amortization spaces these equal payments out over a certain period of time.

Annual Percentage Rate

The annual percentage rate is a term that refers to the interest rate on the loan in question. This term is used by basically every lender. It describes the expense of a loan. The APR is one of the number one factors in evaluating a loan. You need to know what the APR on a loan is before deciding whether to borrow.

Application Fee

An application fee is a fee you have to pay just for applying for a loan. Application fees can be expensive. You may still have to pay them even if you’re not approved. Ideally, you want to find a loan that doesn’t involve an application fee.

Collateral

Collateral is any item of value you use to secure a loan. If you have collateral available to secure a loan, it will be easier to find financing. Collateral could be anything of value. However, it is most often a home or vehicle. Consumers who have struggled to acquire financing should start considering collateral possibilities.

Co-signer

A co-signer can help you acquire the loan you seek. Co-signers back up a consumer’s loan application. They throw their own credit history and income behind a loan applicant. This means that their own credit will suffer if the loan is not repaid. Lenders are more likely to approve a loan applicant with a co-signer. Finding a co-signer is a good option when you’re struggling for loan approval.

Default

The Default simply refers to an inability on the part of the borrower to repay a loan. Default has negative consequences for the borrower’s credit history.

Deferred Payment

Some loans offer deferred payment features. A deferred payment is a payment made at a later date. A common example of a loan featuring deferred payment is a student loan. Borrowers of student loans usually don’t have to start making payments until they graduate.

Loan Commitment

Loan commitment generally means the same thing as loan approval. It is an offer on the part of the lender for a loan. If you are given a loan commitment, you have been approved for a loan.

This loan commitment should detail how much you can borrow and what the interest costs will be. Usually, a loan commitment will expire after a certain length of time has passed. You need to follow through on a loan commitment pretty quickly or you may lose the borrowing opportunity.

Prepayment Fee

If you are borrowing, you should be aware of whether your lender charges a prepayment fee. When you pay off a loan early, there should be less interest charged on the loan. This means the lender makes less money. Sometimes, lenders address this possibility with a prepayment fee. You should look for lenders who don’t charge repayment fees. This gives you more control over loan costs once repayment begins.

Secured Loan

A secured loan is any loan that involves collateral. Generally, a secured loan is easier to be approved for. However, a lot of consumers don’t have the collateral necessary for secured loans. If you have valuable possessions to use as collateral, you may want to use them to qualify for good loan terms.

Unsecured Loan

An unsecured loan involves no collateral. The borrower qualifies based on his or her credit and income alone. Unsecured loans are best for consumers. They don’t require consumers to risk ownership of valuable possessions. However, unsecured loans usually have stricter credit requirements. This makes them harder to achieve approval for.

Underwriting

Underwriting is a term that refers to the process of laying out terms for loans. The lender uses risk analysis procedures to analyze loan applications and devise loan terms. Underwriting is the key factor behind making decisions on loan applications. If you are not approved for a loan, it is likely because you do not meet the lender’s underwriting terms.

Borrowing Process

Loan Processing step by step

When you’re loan shopping, you need to understand how the borrowing process works. The borrowing process could be different with different lenders. Some lenders make things easier than others. These days, many lenders allow prospective borrowers to apply entirely online. However, others will require an interview and an in-person application. When using a loan checker for loan shopping, you should consider these procedures.

Convenience is a big factor when it comes to applying for a loan. You want to look for a lender with a borrowing process that addresses your needs and preferences. You also should understand that you need to take care of some aspects of the borrowing process independently.

Gauging the Market

In particular, the loan shopping process is something you’ll carry out independently. This process is all about evaluating your options. Lenders will be eager to get you to apply. However, you shouldn’t apply indiscriminately. Scope out the best prospects before you apply. Then you can proceed with submitting an application with lenders you think to offer the best deals.

Remember that different lenders cater to different types of consumers. You need to apply with lenders that are best for working with consumers with your credit score and financial situation. The Internet provides you with a lot of information when you’re gauging the market. While you can ask around at banks and credit unions, it’s also a good idea to gauge the market for loans online as well.

Applying

Understand what the application process entails for individual lenders. You want to find an application that is not too complicated or involved. There is some standard information that is required in any application. You should have to provide your employment and identity details. However, some lenders might require more. They may require references. Many also run criminal background checks. It’s a good idea to understand what will be expected of you when you apply.

Of course, you want to go with the lender providing the simplest and fastest application procedure possible. In addition to acquiring about the application procedure, you also should know how soon after applying you will receive loan funds. Many borrowers want to receive their funds as quickly as possible. This is an important consideration because some lenders could require you to wait for a week or more before receiving funds.

Repaying

Of course, getting approved for the loan and receiving the funds is only part of the procedure. Repaying is a big part of the borrowing procedure. The ideal lender will accommodate your needs during the repayment phase. Helpful features lenders can offer during repayment include permitting an occasional missed payment or deferring repayment.

Qualifying for a Loan

When you’re loan shopping, you need to find loans you can qualify for. Before you even apply for a loan, you can usually get a good idea of whether you’ll be approved. Understanding factors lenders evaluate helps you understand your chances of approval. While lenders vary in terms of their underwriting, they tend to focus on the same factors. The following are the three main factors they’ll look at.

Credit

You probably already know that your credit type is an important determining factor when you’re loan shopping. Yet you may not realize that some lenders cater to those with poor credit. Consumers are routinely surprised at being approved for loans despite poor credit. Even if you have poor credit, you can probably find a lender who will offer you a loan. The only drawback is that your interest rate may be high. You need to shop around more with poor or fair credit to find reasonable rates.

Income

Your income is going to be evaluated by most traditional lenders. You may need to meet basic income requirements to be approved. This is the case with most loan types. You need to find a lender who will loan money to consumers in your income range. If you struggle with income requirements, perhaps you can increase your income before borrowing. Taking on a second job or receiving a raise can increase your loan worthiness.

Collateral

You might still be able to find a loan if you have poor credit and low income. Usually, this is possible with loans requiring collateral. Lenders of traditional loans might not offer secured loans or concern themselves with collateral. However, some lenders offer only secured loans. If you want to qualify for a loan based on collateral, do business with lenders of secured loans.

Lenders offering secured loans will typically have certain requirements for collateral. They may use home equity or vehicles as collateral. However, the equity or vehicle has to be worth a certain amount of money. You may also be able to find loans using expensive possessions like jewelry or even stock ownership as collateral. You need to do a lot of loan shopping to find these borrowing opportunities.

Improving One’s Finances by Borrowing

The ultimate goal of borrowing should be to improve one’s finances. You’re going to have to pay back the money you borrow. Therefore, you don’t want to take out a loan that will damage your budget. Loan shopping is so important because you need to find the loan that is best for your finances. You don’t just want to find any loan you can qualify for.

Keeping the following in mind can help you with loan shopping that improves your finances.

Goals

You should set some goals when you borrow. You should have a goal for what your finances will look like when you repay the loan. This will help you stay disciplined regarding spending as you repay your loan. Goal setting is the best way to improve your finances. If you want to borrow, it means you have less money than you’d like to. This means there’s room for improvement in your finances. Set goals to achieve that improvement.

Budget

Too many consumers borrow without thinking things through carefully. This is why they struggle financially. Any time you borrow, it’s good to set a budget. Do some calculations to figure out the amount you can afford for a monthly payment.

Don’t jump into a loan unless you’ve prepared adequately. At all times, you should have a budget in place. This budget should detail your expenses and your income. It should also be setting some money aside to go into your savings each month.

Plans for the Future

Setting goals and creating a budget isn’t all you should do. You should also have more long-term plans in mind. Looking ahead is important for your finances. Your long term goal could be homeownership. It could be completely getting out of debt. It could be starting your own company. Whatever your long-term plan is, you should have one and stick to it. This will give you focus regarding your borrowing and budgeting.

In Conclusion

It takes an effort to optimize your finances. Part of that effort is being informed each and every time you borrow. Loan shopping is all about being informed regarding available financial products. You should now be aware of what the important terms are to understand in order to choose the right loan. You have enough information to understand any loan offer you receive.

Once you’ve done some research, it’s good to get some loan estimates. Those offering loans can evaluate your credit score and income. They can then provide an estimate. Apply with the lender offering the best estimates according to your needs. Then, you will be one step closer to making that purchase or investment you have in mind.

Retail Loans For Your Store: Always Open

The idea of starting a business can be so exciting. The freedom of being your own boss, the joy of building something that is yours. The excitement of spending your days doing something you are passionate about. Hopefully leaving something for your kids, the possibility of growing your savings account more than you can with a regular job…. And then, reality sets in. And you are suddenly overwhelmed. You need money and time to run this thing and make it successful. I know. I’ve been there.

I have always been a business-minded individual. As a child, I was always trying to carry out some type of money-making venture. When I was seven, I talked my best friend into making bookmarks with me to sell for $0.25 each. It did not go very far, but the mailman was nice enough to buy one. At ten, I sat at the edge of my yard with signs and a giant bucket to raise money for charity. That also did not go very well. Possibly because I lived out in the country on a road no one went down.

Those failures did not dampen my spirit though. Even now in my thirties, I still have a ton of ideas. The trouble is getting them started. Having the time and money needed to fulfill these ideas is hard.

All You Need to Know about Retail Loans

I assume that you, too, are looking to start or grow a business or you probably would not be reading this now. You have probably heard of business loans and know that they could do wonders for your business, but they are not always the answer. Let’s take a look at business loans, retail loans in particular for those in retail or hoping to get into retail. By the end of this article, you should have some clarity on what moves you should make.

Are Retail Loans Different from Personal Loans?

Both business and personal loans are money that can be used for a variety of things. There are a couple of differences, though. Personal loans are based on personal information, like your personal credit history. Business loans are dependent much more on your business history.

Also, if you default on a personal loan, they can take personal property as collateral. This is often- though, not always- different from business loans. For instance, if it is a home-based business or it fits some other criteria, your personal property may still be collateral. Before signing any contracts, be sure that you understand just what you are risking.

There is also the fact that- as stated above- a business loan depends on business history. In other words, if you have no business history, you probably will not qualify for a business loan. It is best to have at least a few months of business under your belt before applying for a business loan.

What does this mean for start-ups? You should apply for a personal loan, instead. Or, you may look for a business credit card to help you build business history. In fact, both start-ups and established businesses may find better interest rates and terms through either personal loans or business credit cards.

Just like you shop for the best insurance rates, shop around for the best loans. (And if you do not shop around for insurance, you should start now for the sake of your wallet.) You can do this easily by comparing each loans shop online. At the very least, you can gather enough information to know where to apply. Hey, you have a business to run here- you have to save time where you can.

Why Get a Retail Loan?

There are plenty of reasons to get retail loans if you are in that industry. Some of the most common are listed below:

Starting a Business

Starting a business can be extremely expensive. The total depends on the type of business, but some costs can include:

  • Licenses
  • Equipment
  • Inventory
  • Trademarks
  • Website hosting, design and logo
  • Office and business location
  • Marketing and advertising
  • Office supplies
  • Utilities
  • Insurance

And that list can grow. Not every business needs everything on the list, but those are the most common costs.

Growing a Business

Some existing businesses decide that they want to expand. Again, the exact costs depend on the business you run and what all you want to do with the expansion. You may want to rent or purchase more space, buy more efficient equipment, hire new people, have more inventory, open an out-of-state location, and more.

Buying an Existing Business

There are businesses out there whose owners decide they do not want it anymore. They may be tired of the headache, feel that they are not a good leader, or they may just want to retire or pursue other business ideas. Either way, rather than shutting the company down, some opt to sell their business to someone else.

This can be a good move for people looking to run a business. All of the start up is already done and the business likely already has customers and a reputation. The new owner typically has to just go in and continue what is already happening.

New Equipment

Perhaps you have discovered a new piece of equipment that will make your employees’ jobs easier, protect your physical location better, or make the company run more smoothly in general.

New Inventory

Some businesses need to purchase new inventory, either to replace existing inventory or simply add to it to increase sales.

A Complete Overhaul

There are times that just getting new inventory or new equipment is not enough. Sometimes, if a company is not doing well or has simply become stagnant in growth, it needs a complete overhaul. This might include a new location, new inventory, new or more employees and management, a fresh advertising and marketing campaign, and more.

Other Expenses

Marketing is a part of every single business that exists. The amount and type of marketing varies, though, according to the business and those in charge of marketing. Some marketing is free while other marketing campaigns can cost a fortune. In addition to marketing, there may be other expenses you run across.

Types of Retail Loans

There is a variety of retail loans for different people, businesses, and purposes.

Lines of Credit

Just like a personal line of credit, a business line of credit makes a certain amount of money available to you that you can withdraw as you need it. This is a good choice for those who do not know all of the expenses they will face yet, but the interest rates can get high, so be sure to shop around.

SBA Loans

If you get approved for an SBA loan, you are quite literally in the money. That is because the idea behind them is to actually help small businesses thrive. They offer great interest rates and repayment terms. Unfortunately, these are quite possibly one of the hardest retail loans to get, so apply for them but apply for other types as well.

Business Credit Cards

If you can find a business credit card with good interest rates and a high enough credit limit, they are great choices.

Short Term Loans

Short terms loans are available for businesses, but they have higher interest rates and have to be paid back pretty quick- that is why they are called “short term”. These can be helpful if you do not have other options, but be sure that you know what you are getting into- in other words, read the fine print. Sometimes, they are just not worth it.

Consumer Loan

While these are not termed as business or retail loans, we have already established that you can use a consumer loan or personal loan for a business. Some of the most popular ones to use for business include a home equity line of credit and personal installment loans. You might also consider a loan for refinancing other debt, such as credit cards or your mortgage. This is because you are not only minimizing your debt and opening up more spending room for the business, but you may also refinance for more than you need and use the extra for business.

If you are unsure of what to do, hop online, find a loan checker, and discover what options are available to you based on your credit and financial situation.

A Guide to Understanding Different Types of Business Loans

Know What You Need

It is best not to just go apply for retail loans without having a plan for the loans. First, most lenders want a good idea of what you are spending the money on. Unlike personal loans with which lenders barely ask, you have a better chance of being approved if you have a specific plan that shows a good chance of successfully increasing your business income.

This is not to say that plans do not change, that the amount you thought you would spend on something is different, or that you need to add or take something away. You are not a fortune-teller and lenders know that. However, always check the fine print or ask the lender if changes will be a problem. Most likely, they will say “no”, but it is always best to be sure. So, before you start looking for retail loans, think it through and have a pretty good idea of what you will spend the money on as well as how that will benefit the business.

Be Strategic With Your Retail Loans

You need to know what you are doing with your retail loans. Set a plan that provides a step-by-step process of what you will spend the money on, at what point you will spend it, the maximum you will spend on each thing, and so on. Having a clear path laid out will not stop you from needing to make changes, but it will help you avoid unnecessary purchases and expenses.

Where to Get Retail Loans

Like personal loans, there are many places you can get retail loans. Check with your personal bank as sometimes- though not always- you have a better shot at approval since you have a relationship with them. In almost every city, there is at least one type of lending business that is not a bank. You can take the time to call around to each place and ask questions, or you can use the Internet to possibly locate multiple options that are available to you.

Or, you can shop for a loan right here, right now. And you know that Loanry brings you ONLY reputable lenders. So, if you’re interested to see whether you qualify for a loan with one of our lenders, put in your information below and you’ll get offers in seconds.


Keep Them Separate From Personal Funds

Always, always, always keep your retail loans, or any other business loan, separate from your personal funds. Even if your business funds come from a personal loan, they need to be in a separate account. This will keep you from unwittingly spending your personal funds on your business or your business funds on your personal bills.

When your funds are kept separate, you know what you have available for each category so you can make appropriate decisions. If you do decide to use some of your personal money on your business, it will be a conscious decision.

Other Ways to Finance a Business

Of course, there are always alternatives to getting loans, including retail loans. Here are some ideas:

Start Online

This is the digital age, meaning that you no longer have to have a physical location to be successful. In fact, running a business online can be freeing- and much less expensive. Since the overhead is much lower, profit margins are also higher. Instead of getting retail loans for a physical store, look into dropshipping or opening an online store and shipping the inventory yourself. Start somewhere like Amazon.

Starting an online business still requires funds, but the amount is much lower. Here is an idea of costs:

Hosting and domain name for your website

You can expect to pay between $100 and $200 upfront, but that is for the whole year.

Website design

If you go through a host that supports WordPress, as most do, you can set your site up completely on your own for free. However, it can be time-consuming, especially if you have never done it before. If you choose to have someone do it for you, you have a ton of options. Your hosting service usually has the option for you to just pay them, and it is usually reasonable, often for $100 or less. Look on Fiverr for skilled people looking to grow their reputation. A lot of bloggers will do it for $100 to $200, sometimes less. And, of course, you can always hire a design firm or more expensive freelancer to do it, but you can expect to pay more this way.

Website theme

WordPress offers plenty of attractive free themes. Unfortunately, the customization is limited. You can do like I did and start with a free theme, then work your way up. I can say, though, that I wish I would have started with a premium theme. It would have saved me a lot of frustration as I spent countless hours trying to make things look like I wanted.No matter if you or someone else is setting up your site, you will need a theme. Sometimes, this is in addition to the cost of paying someone to do it, but sometimes, the theme is included in the price. You can check on this if you choose to hire someone. They will let you know what all is included.

Trademarks, Copyrights, and More

Not everyone will need these, but if you come up with an incredible logo design or business name, you should think about this. You do not want someone stealing your brilliant ideas.

Payment processor

These do not always charge upfront. They usually just take a percentage of the sales they process. Sometimes, you can find free ones, or they come included in a design or service, but sometimes not.

Dropshippers

If you do not understand dropshipping, that’s ok. It is actually pretty simple but some people explain it in a complicated manner. Let’s see if we can make it easy to understand: We’ll use the retail giant Walmart as an example, mostly because the majority of people have shopped there at least once in their lives. Okay, so Walmart is very simply the location that brands are sold at. For instance, the clothing brand George is at Walmart, but Walmart itself does not make the clothing. Instead, George sends Walmart the items and Walmart sales them- but, the inventory is usually sent to Walmart’s warehouses until individual stores need them. Simple enough, right? Okay, so Walmart also has an online store from which you can still purchase George items as well as other items normally sold in stores. However, if you have ever shopped online, you have probably noticed certain items that state “Sold and Shipped By” someone that is not Walmart. Walmart never touches that inventory, but they are an online storefront for these brands and make a percentage of the profit. That is basically dropshipping.

You provide the website, or the “storefront”, and link up with shippers. When shoppers purchase an item on your site, the order is sent to the shipper, the shipper sends the item directly to the customer, and you get a cut of the sale without ever storing or even having to see the inventory. Sounds awesome, doesn’t it? It really is- I can say for sure because I have tried it myself. If you decide to go this route, you look for drop shippers, like Doba and AliExpress. They often offer you a free trial for a certain number of weeks to give you time to set up your store and see if you like them as a business partner. Then, you will be a monthly fee. This fee is usually $30 or less, though I cannot speak for every drop shipper. It is, though, the simplest and cheapest way to start a retail business.

P.O. box

You do not want to display your personal address on your website. So you need a P.O. box to list as your business address.

Email provider

I could go on and on about how an email list is an online business’s best asset. But if you simply Google the term “email marketing”, you can find every advantage under the sun. Suffice it to say, you need an email marketing provider and a way to capture your customers’ email addresses. You can pay about $6 a month or more if you want extra features to get a business email address from Google. For as little as $10 a month, you can get an email marketing service, like Mailchimp. Most businesses opt for more expensive services due to the available features, but the most popular I have found is ConvertKit for about $30 each month.

Other expenses

Your state or county may or may not require licenses and documentation to run your online business. So double-check to keep yourself out of trouble. You will need equipment, of course, such as a laptop, tablet, or computer and internet to go with it- unless you want to use your local library’s internet. You will run across other small expenses most likely, so add in a little padding when calculating your costs.

I’ll stop there with the basics. But the point is that you can start an online business for next to nothing. Or spend more on extra things you want or feel you need. Also, if you want, you can always open a physical location with the profits you make online. However, you may find that running the business online is favorable.

Raise the Funds

You can always raise the funds, or at least some of them, in many different ways. Pick up extra shifts, hold yard sales, pick up a second job (yes, in addition to trying to run your business), sale personal items online, sell name brand clothing at ThredUp, or anything else you can think of. You might also check with your cities rules on fundraising, like the Girls’ Scouts or cheerleading squads. There are a ton of fundraising options, just make sure that there are no rules about who can do the actual fundraising.

Ask Family or Friends for Help

If you have a supportive group around you, they may be willing to help by throwing in some cash or skills to get you up and going. You might get a loan from one of them, or you might find yourself with a partner who wants in on what you are doing.

Save the Money

There is always waiting until you save the money. But for some people, that may take forever on their regular income. However, by budgeting your income and being serious about saving, as well as adding in some of the other options here, you can save a little quicker. Besides, you do not want to jump in headfirst without doing research and having a plan. Use the time you are saving or earning to solidify what you want to do with your business. Even if you only make or save enough money to knock off some of what you need, that is some that you will not need to borrow.

Conclusion

If you want to start a business, do not let overwhelm or a lack of finances stop you. As they say, “Where there’s a will, there’s a way”. Often, the hardest part is finding the way and getting started. Other times, it is a lack of clarity and time. Start your path to success by stating clearly what you want. And research what steps you need to take to get there. Then, get to work on those steps.

Even if you only have an hour a week to put toward your business, progress is progress. Consider this, though: The right amount of business financing, be it through personal funds or loans- can open up your time. When calculating start-up costs, consider taking time off from your other job. A loan can help cover your personal expenses while you are busting a move to get your business up and running.

Some people go as far as to quit their job to focus on starting their business. I am a huge proponent of following your dreams and doing what it takes to make them happen. But I would not suggest leaving your source of income unless you are certain you have another one coming. It may be wiser to just take some time off. If you choose to leave your job, you need to ensure you have the money to repay any loans you take out or you may find yourself in a load of trouble.

Where Can I Find a Loan Payment Calculator?

There are many situations that happen that are outside of our control. These situations may require you to need a loan due to unexpected expenses. You could face high medical bills or a car that needs expensive repairs. If you are considering a personal loan, you probably have a lot of emotions about it. You probably feel nervous and worried about taking on more debt. And you may be uncertain if a personal loan is right for you. You should not enter into a loan without giving it a lot of thought. If you obtain a loan without thinking it through, you could put yourself in a financial bind. Fortunately, there are tools to help you determine if a loan is right for you. You can use a loan payment calculator to assist you to determine if you can afford a loan.

What Is A Personal Loan?

Infographic about the types of personal loans

Before you can even consider using a loan payment calculator, you should understand more about personal loans. You should have as much information as you can about personal loans before you decide to obtain one. A personal loan is when a lender allows you to borrow money. The lender adds interest to the loan as a fee for allowing you to borrow money. That ‘fee’, or interest, is based on your credit score. The lender has some freedom to decide how much interest to charge you.

A lender can be a bank, traditional or online, a credit union, and even family or friends. Anyone that lets you borrow money is a lender. In return, you promise to repay the loan by making regular monthly payments for a set period of time. That period of time can be three to five years. The amount you pay each month is typically a set amount as long as you have a fixed interest rate. I go into a little more details about interest rates later in this article.

A credit card is not a personal loan. That is considered revolving debt. You have a set amount on your credit card. You can only use that much credit. Once you pay any amount of it off, you can use that amount again. That is why it is called revolving. A personal loan does not replenish. You are given a set amount and you pay it back every month. Once you have paid back all of the money, the loan ends. To get more money, you have to apply for another loan.

What Is A Loan Payment Calculator?

A loan payment calculator is a tool that is available online that shows you how much you may have to per month to repay a loan. You have to enter some information into the calculator such as the amount you want to borrow. You also must enter the length of the loan and the interest rate to receive an accurate monthly amount. This article is for personal loans, but a loan payment calculator is used for auto loans, mortgages, and many other fixed loans.

Some loan calculators allow you to enter your credit score, which means in addition to giving you an idea of how much you must repay each month for your loan, the calculator helps your determine which is the right loan for you. It can show you the different loan options for your comparison. You can also see how varying interest rates changes your monthly payment.

Where Can I Find One?

You can find a loan payment calculator on various websites, including bank websites. These types of calculators can be a loan checker for you. They can give you various pieces of information. In the section above, I talked about payment calculators producing monthly payment amounts. It shows you that the monthly payment amount decreases the longer the term of the loan. The calculator shows you the total principal of the loan. This is the full amount of the money you want to borrow that does not include the interest. The better credit you have means you can obtain a higher loan amount. You also learn the total amount of interest you pay for the whole life of the loan. When you have bad credit, you receive a higher interest rate. This means you pay more money in interest over the life of the loan.

Are There Different Types of Interest Rates?

Yes, there are a few different types of interest rates. The first thing you should understand about loan interest rates is they are based on your credit. I go into more detail about interest rates later in this article. For now, you should know that the lower your credit, they higher interest you pay. A loan payment calculator can help you determine how much interest you might pay with your credit score.

Fixed interest is when a rate is set. When a lender offers you a loan with a fixed interest of 12 percent, your interest rate remains at 12 percent for the life of the loan. This is the easiest interest rate because your monthly payments remain the same amount each month and do not change. A fixed rate is typically the prime rate with some additional percentage points added on by the lender. The prime rate that lenders use is typically based off the Federal Reserve’s prime rate. Rarely do lenders offer the prime rate to customers seeking a loan. They do offer it, but only to those with the best credit.

Variable interest means that the interest rate most likely will change. When the interest is variable, it is tied to the prime rate. When the prime rate changes, so does the interest rate. The prime rate goes up and down, so a variable rate may benefit you as a borrower if it goes down. That means the interest you are paying goes down. Be cautious when agreeing to a variable rate. It does not always work out in your favor. When the economy is in a good place, the prime rate is usually low and stays low. When the economy is not doing well, the prime rate rises.

How Do I Know If A Personal Loan Is Right For Me?

I mentioned above most people feel stress when they need a personal loan. In most cases, you need money quickly to cover some expensive you cannot afford. Many times these events are outside of our control. Even so, you should not obtain a personal loan without giving it a lot of thought. You may feel like you do not have any other options, but you might. You should consider all of your options, not just a personal loan.

While considering all of your options, you also need to determine if you can afford a personal loan. You are the only one that can decide if a personal loan is right for you. If you cannot afford to make the monthly payment, you are putting yourself in a bad financial position. You should consider why you want a personal loan.

You should think about the purpose of the loan and determine if it is a necessity. If you want to obtain a loan for a television, or new furniture, it may not be a good idea to get a loan. However, if you need a loan for medical expenses, you may need a loan. Again, you should only consider a loan if you can afford to make the monthly payments. One of the ways to easily determine if you can afford a personal loan, you can use a loan payment calculator.

It’s important that you go to the right lender when taking out a loan. Loanry can help you to make sure you’re on the right path. Put in your information below and if you meet any lender’s criteria, you may get an offer:


Does My Budget Really Matter?

Yes, your budget always matters. It is important to understand the money you have coming in every month in the form of income. It is just as important to understand the amount of money you have going out each month as expenses. The difference between the two is how much money you have left each month after all your bills are paid. Hopefully, that amount is not a negative number. If it is negative, then most likely you are not even paying your bills. Unfortunately, everything you want to do is drive by how much money you earn. That is why it is important for you to understand how much money you earn. Then you know how much money you can spend.

The good news is there are many tools available to you to help you. One of the best tools available is the internet. There are so many websites with an abundance of information. One thing you will find is a budget worksheet and calculator. These tools help you list out all of the money you are spending and look at ways to cut spending when needed. Once you know how much money you have left over each month, you can use a loan payment calculator.

This will help you find a loan that fits into your budget. Once you know how much money you have to spend, it is important that you do not agree to a loan higher than that amount. If your budget tells you that you have $150 each month, you cannot get a loan with a repayment amount of $200 per month. You are already setting yourself up for failure and a worse financial position.

How Do I Create A Budget?

Creating a budget is easier than you think. The real issue is that no one wants to take the time to sit down and work through it. It is always much harder when you look at the real numbers on paper. Even though you probably have some idea of your budget, it is not real until you see it in black and white. As a result, no one wants to create a budget. It is important to keep in mind that creating a budget puts you in control of your money, spending, and saving. If you have any goals that require money, you should start with a budget. Once you understand your budget, then a loan payment calculator helps you understand your loan possibilities.

But first, let us look at how you create a budget. You must remain realistic in your budget creation. This is something you want to maintain, so it has to be something you can continue doing. If you set unrealistic goals, or do not give yourself enough money to do the things you really want, your budget falls apart. The first step is to gather all of your expenses. Do not skip any of them. You must include everything or this process will not work.

Once you list all of your expenses, you put them into categories. You have the items that are essentials, such as rent, food, and clothes. Then you have a categories for must have items, such as utilities and car, if you need it because you do not have access to public transportation. Then you create a category of non essential items, such as television, phone, eating out, and other miscellaneous items.

What If I Have Really Low Income?

In all budget scenarios, it is important to understand what is in the categories you created. When you are creating a budget on a low income, it is even more important. You may have to make some difficult decisions. And you also need to keep your end goal in mind. You should decide how important your end goal is to you. One thing that you may not consider to be an essential bill is your credit card payments. It is important to pay them on time and pay as much as you can. You should always strive to pay the balance in full, but if you cannot, pay more than the minimum balance. This helps to protect your credit and reduces the amount of debt you have. Even when you have low income, you cannot let those bills fall behind.

Once you have put all your bills into categories, you should take a look at each category and see where you can save money. You should do this even with your essential category. Yes, you need food, but are you shopping at the most expensive grocery stores? Are you purchasing items when they are on sale? Are you purchasing only the items you need? You should take a hard look at all the items you are buying and find cost savings.

It may seem like a daunting task but you can save hundreds of dollars per month. Once you get the hang of it, it becomes much easier. Another fast way to save money is by cutting the number of times you eat out per month. If you tend to eat out, and that includes trips to your local coffee shop, often, cut that back to once or twice a week. You will see incredible and fast savings.

If as a result of your budgeting, you may find that you have a large amount of bills you must pay down. You may also realize that you cannot get ahead of them by paying only the minimum payment per month. In these cases, you may want to consider a personal loan. If paying off all of your bills at one time frees up enough money to make a monthly loan payment, it may be a good option. You can determine how much a loan may cost per month with a loan payment calculator. It is important to make sure that you have enough money to pay the loan each month or you will put yourself in a worse position.

Does My Credit Matter?

Yes, your credit always matters. Your credit makes a difference in just about everything you do. It does not matter if you want to buy a house, rent an apartment, buy a car, or get insurance, your credit makes a difference. So, it is incredibly important to protect your credit at all costs. It is hard to bring your credit up once it starts to decline. First, let us talk a little bit about what is credit.

Your credit score is an indicator to lenders how much of a risk you are. The lower your credit score, the more risky it is for them to loan you money. Your credit score is a three digit number that appears on your credit report that indicates how well you use your credit. If you have a low credit score, it is often because you have missed payments or late payments. A typical credit score ranges from 350 to 850. Most have a credit score somewhere between 600 to 750. Good credit ranges from 670 to 800. Anything below 570 is usually considered bad credit.

When you have bad credit, it is much harder to get a good interest rate. You may find it is difficult to be approved for a loan. If you are concerned about your credit score and how it impacts your ability to obtain a loan, you can use a loan payment calculator. This tool shows you what type of interest you can with your credit score. It also shows you how much your monthly payment is based on the interest charges.

What If I Have Bad Credit?

You already know you have bad credit, so what does that mean for you? It means that you are going to have a higher interest rate for your loan. Also, it means that you are going to pay more per month to pay back the loan. It may mean that you have a difficult time getting approved for a loan. It also means that you must do some research to find a loan that fits your needs and budget. The good news to all of this is thanks to the internet, that research is easier.

There are many tools available to you to help you in your search. One of those tools is a loan payment calculator. You can enter your credit score and it provides you banks and the interest rates they most likely will offer you. While you may find that the loan repayment amount is higher than you want to pay, you know immediately what options are available to you.

The more you know, the better positioned you are to make good decisions moving forward. A loan payment calculator can assist you with that. Fortunately, you can find them quickly just by doing an internet search. Many bank websites offer them as one of their financial tools. It may seem surprising to you, but lender want to help you help yourself when it comes to lending. They want you to find the answers you need so when you come to them, you are prepared. Not only does it benefit you, but it helps them, too. Before you decide on a specific lender, you should see what types of tools they can offer you on their website and in the bank.

Can I Repair My Credit?

The good news is yes, you absolutely can repair your credit. The bad news is it is not a quick fix. It takes time and consistency to improve your credit score. It goes down fairly quickly but does not come up as fast. The first thing to do is to pull your credit report. You are able to get one free one per year and you should take advantage of it. Your credit report shows your entire credit history. Review it and look for errors.

If there are errors on your report, you should correct them immediately. This can help your credit score increase. After you have corrected all the errors, now you must start making payments on time and in full. As I mentioned above, one of the top reasons for a decreased credit score is late payments. Now, you should make sure you pay everything on time. Even if you can only pay the minimum amount, pay that on time.

Sometimes a personal loan is the best way to improve your credit. It allows you to make regular monthly payments on time which can boost your credit score. You can use a loan payment calculator to determine what that payment amount may be. Keep in mind, if you have bad credit, you have a higher interest rate, which means you have to pay more per month. You have to determine if taking out a loan is something you can afford to repay. Using a loan payment calculator can assist you when making that decision.

Are There Loan Alternatives?

You may have alternative options to obtaining a loan. Unfortunately, most of them are not fast. So, if you need cash right away, they may not be able to meet your needs. You can borrow money from family and friends. Usually, they do not charge you interest or do not charge you as much interest as a traditional lender. You can work hard to reduce your spending significantly which frees up money to pay the bills that are essential. You can get a part time job to bring in some extra money to pay the essential bills.

Many of us want instant results and when it comes to money, few results are instant. It takes time to build credit. Likewise, it takes time to improve credit. It takes to pay off debt and save money. You must start with the end in mind. Is your goal to get out of debt? Or is your goal to save more money? Is your goal to pay for an emergency repair? Determine that first and then work from there. If you decide to obtain a loan, use a loan payment calculator first to get an idea of how much that costs you per month.

Conclusion

I talked a lot about finding a loan payment calculator online. They really are easy to find with a quick search. You can use more than one to see if you get the same results. Once you have found out the numbers from a loan payment calculator, it is time to really think about is this the right move for you. Once you create your budget and determine how much money you have each month, you know how much you can afford to pay. It is fairly easy to tell if you can afford a loan. If you cannot afford to repay the loan, do not get one.

It is really that simple. It may not be what you want to hear, but it is the truth. If you cannot repay it, you will miss payments or make them late. This impacts your credit. Your credit declines and collection calls might start. It puts you in a bad place financially and that really is not where you want to be. Make smart decisions about obtaining a loan. If the numbers tell you that you cannot afford one, do not pursue it. You should find other ways to bring in more money.

How to Get a Personal Loan for a Pool: Dive in Cautiously!

My family and I live in the south- like, the real south. Alabama to be specific. You have probably heard some jokes about a lot of things down here, but one thing everyone who lives here or has visited here in the summer agrees on is that summertime is hot. And it is extraordinarily humid. Air conditioners are a necessity, not a luxury. So are bags of ice and gallons of water.

My story:

Don’t get me wrong- the summers here can be awesome. Getting out on the river in your boat, riding jet skis, taking your kids to the community water splash pad, turning the water hoses on and soaking each other, or having water balloon or water gun fights are just some of the joys. However, try getting through the summers without some cool water to play in, it will be an uncomfortable misery like you have never known.

That is why two years ago, I splurged to by my family a decently sized pool. We had some other ways to get wet, but I longed to submerge myself in water. I ordered it online and we anxiously awaited the delivery. When it finally arrived, I was probably more excited than my kids.

Unfortunately, about two weeks prior to delivery, I had literally ripped a muscle apart in my back and was in the process of recuperating, so my husband refused to let me help move the box or set the pool up. And in a crazy turn of events, he slipped a disc in his back while moving the box. Here the two of us are limping around and unable to do anything more than stare at the pool just waiting to be assembled.

About a month later, we decided that we were recuperated enough to make another attempt at putting the thing together with the help of our teenage son. We get all of the parts laid out, suffer through the dreadful mosquito bites, and after hours of agony, we had it together. In went the hose pipe and we filled it up, then put all the necessary cleaning stuff in and, voila! We had our pool but we had to wait 24 hours for the chemicals to settle.

My dream:

I dreamed of that pool that night, and the kids and I were so excited that we wanted to jump in before even eating breakfast. So imagine my utter dismay when we awoke the next morning to find this huge pool empty. After all of the injury, pain and suffering, the crazy thing had a hole in it. And because we had taken it out of the box and put it together, the retailer would not exchange it.

I cannot begin to express the emotional anguish we all felt. For days, we sat around feeling angry, and hot, of course- very hot. We were so desperate to cool off that I nearly went to the very expensive pool place down the road and finance four times the cost of our original pool for these guys to deliver it AND set it up. I stopped myself just in time, but it did cause me to consider getting a pool loan, so I want to share what I learned about them.

What Exactly is a Pool Loan?

A pool loan is simply a personal loan for a pool. Personal loans can be used for virtually anything, and that includes pools. If you are considering a personal loan for a pool, there are a few things you should think about first.

What Kind of Pool Do I Want?

There are many different types of pools from little tiny baby pools to enormous in-ground pools, and those in-ground pools can be made very elaborately. So what kind are you looking to get? One factor when deciding this is estimating how long you think you will be at your current home, and whether or not you own that property.

While I would love to have nice in-ground pool, I plan to sell my house before too long and move into something better suited for my large family. Due to this, I would not have even considered an in-ground pool for my current home. If you are renting, do not invest in a permanent pool. Just get something to play around in for now.

You must also consider that in-ground pools are pretty expensive. You can get a pretty large above-ground pool for a few hundred dollars. Then again, I have seen some amazing videos on YouTube of people who have built their own very nice in-ground pools. If you have the skills and patience, you might be better off buying the supplies and doing it yourself. This is all really up to you but you should know what type you are willing to pay for before looking into pool loans.

Can I Afford to Repay a Pool Loan?

Be truthful with yourself. Can you afford another payment? If you are currently struggling to pay your utilities, or have nothing left over after you do, a pool loan is probably not a good idea. If you are willing to pick up a second job to pay for the loan, it might be okay. At the same time, though, if you are spending all of your time at work, will you even get to enjoy the pool? If not, you might consider taking that second job and saving up until the following summer, buy one outright, and then spend that whole summer enjoying your hard work while soaking up some rays.

Will It Interfere With Other Things?

Pool Loan
AVERAGE COST OF A POOL

So what stopped me from running down the road and financing that pool? I knew just how much that loan would hurt my family. We have certain goals, some of which include clearing up our credit and saving for a house, saving for our four children to go to college, buying a new car that runs right, buying our teenager a car before he graduates, and a few other things like those. We also want to put our children into some activities they have been asking to join, build my business, and just be free enough to grab a couple of pizzas once a month and enjoy a movie.

Had I gotten that loan, I would have put many of those goals on hold and most likely would have had to be away from my family even more to work extra. Weighing out the pros and cons, it just was not worth the consequences- as desperate and as sweaty as we were. Our other goals held much higher priority in our hearts.

What about you? Will getting a personal loan for a new pool interfere with anything else you are trying to do? If so, is it worth putting your other goals on hold? You should really think this through carefully before making a decision. For some people, a pool is a bigger priority, and that is okay. It may be the one way you can get all of your kids away from their tech without acting like they cannot live. You may want to have friends over more often. Maybe it is a way to improve your health. And it may just be something you want bad enough to put above other things at the moment. It is a personal choice but it should still be carefully thought through.

Is There Another Way to Pay for the Pool or Beat the Heat?

Even though we chose not to get a long, we were still sitting at home sweltering. It was so hot that we did not want to move, we just wanted to sleep all day. Inside our house was even worse than outside in the shade. Somehow, I had to get us and keep us cool.
One of the best things about growing up in the country, and without a lot of money, is how creative you learn to be. I remember wanting a Slip-N-Slide as a kid, but we could not afford it. What we did have was an old pool liner, a hose pipe, and a huge yard- all of which added up to a homemade water slide. We also had freezing cold creeks and summer rain.

I saw no reason not to get creative with my own kids. We, too, made a water slide and a small pool made from some wood and a tarp that I saw on Pinterest. We had water gun fights, ice fights, and water balloon fights. When it rained, we would play in it. We started working on a pool savings that we started funding through yard sales and a few car washes.

How about your situation?

Are there other ways to stay cool while you save for a pool? There are many gyms that have pools available for members. While this is an additional monthly charge, it is probably less than many pool loan payments, and there is the added benefit of exercise equipment and not worrying with the maintenance of the pool, which is costly in and of itself.

Maybe you know someone that has a pool, and you can exchange some yard work or pool cleaning for a swim a couple times a week. Do you have any rivers or creeks nearby? I will say that this is not my favorite option as I am quite germaphobic since having children, but my children still love it. About 30 minutes away is a man-made beach near the local dam. I took my children once, and they have begged to go back ever since. If you are unsure of activities or places, social media will likely have some answers for you.

Is a Pool Loan a Good Idea for Me?

After considering all of the following factors, you must decide if you want to get a personal loan for a pool. Only you can decide if a pool loan is a good idea for you. If you feel you might be too hot and desperate to make a good decision, talk it out with a friend or coworker. Or go old school and write out a pros and cons list- those still work very well. If you choose not to get a pool loan, make a savings plan and find an alternative means of staying cool. For those who decide to get a personal loan for a pool, keep reading for some additional information and tips.

How Do I Know If I Will Qualify for a Pool Loan?

Though it is not possible to know for certain if you will be approved for a personal loan for a pool  until you actually get approved, you can use a loan checker to determine whether or not you are eligible for a personal loan. There are, of course, certain things that lenders look for before approving you. One of the biggest factors is whether or not you can afford to repay the loan. By looking at your income and your outgoing, they get a good idea of your ability to pay. Most will also look into your credit history to get an idea of how responsible you are with debt.

While requirements will often vary from lender to lender, be prepared when you apply for a personal loan for a pool with your personal and income information. You might also consider having some collateral in mind just in case you can only qualify for a secured loan. Using a personal loan checker can usually give you a good idea of what you might qualify for and, most likely, lenders that might approve you. It might also tell you what kind of interest you are looking at paying. Again, until you are approved and your lender tells you the terms and interest, there is no certainty. However, using a loan eligibility checker can give you some information to work with.

Where to Get a Loan and What Type of Personal Loan for a Pool to Consider

For those who have applied for a loan before, you are aware of the overwhelming number of loans that are available as well as the vast amount of loan places both online and offline. For those who are unaware, brace yourself. It is what is known as a saturated market. However, even with all of the loans and lenders available, it is still a very useful market because almost everyone has needed some type of financial help before. The key is in finding the best loan and lender for you. First read the entire article so you would get an idea what you’re looking for. Then, you can get back here and take a look at the form below. If you fill it out, Loanry connects you with reputable lenders and you can get offers within seconds. If a pool loan is something you’re seriously thinking about, consider starting here:


The more you know about them before shopping for a pool loan, the better, so let’s learn a little. As far as a personal loan for a pool, there are really only a couple that make sense. Here is why: some charge high interest and need to be paid back quickly while others charge lower interest and give you a longer repayment period. Here’s the breakdown:

Not Ideal for Large Purchases

Title Loans:

Let me speak openly here- title loans should be a last resort in case of emergency. It makes no sense to use them for large purchases. You put your vehicle title up as collateral. Logically speaking, your interest level should be pretty low since the lender is assuming so little risk. However, that is not the case. The interest I have seen is anywhere from 25% to 36%. That is huge- hundreds in interest a month. So, it is unwise to take out such a high interest loan for something like a pool when you will likely end up paying four times more for the pool at least by the time you are through paying it off. Unless you are getting something big like a tax refund check in the next few weeks, this is not a good option.

Payday Loans:

Payday loans are basically the same as title loans in terms of cost, but you usually do not get as big of a loan. In fact, most people do not get enough on the first loan to pay for more than one of those small easy-set pools. And by the time you pay the interest on the payday loan two times, you could have paid for that same pool outright. This is also not ideal for a personal loan for a new pool.

Secured Loans with High Cash Collateral:

Secured loans can be okay as a personal loan for a new pool, but not if you have to deposit the same amount that the pool costs. What I mean by this is that some secured loans and secured credit cards require you to put down a cash deposit. At times, it is a small percentage of the loan amount. However, for some with low or no credit, they require the full loan as a cash deposit. If you want to build your credit while buying the pool, this might be a good option. However, let me point out the fact that if you can afford to deposit the full amount of the loan, you do not need the loan to pay for the pool.

More Ideal for Large Purchases

Personal Installment Loans for Good Credit:

I may sound biased- and I might be a little bit- but I believe that installment loans with good credit are the best option when looking for a personal loan for a pool, and just about everything else. That is because the interest and payments tend to be much lower- some even below 10%- and repayment terms are often very doable. I advise looking into these first if you qualify.

Personal Line of Credit:

A personal line of credit is similar to a personal loan online in that a line of credit is often much more favorable than other high interest loans, credit cards and title loans. The differences a line of credit and a personal loan usually has fixed interest while a line of credit has variable interest, and a line of credit is revolving while a personal installment loan is not. Still, with a personal line of credit, you can take the amount you need out and make smaller payments than with a high interest personal loan for a pool.

Secured Loans with Low or No Cash Collateral:

I spoke a moment ago of secured loans that require high deposits. Now, let’s talk about those that do not. There are secured loans that require a small portion of the amount of the loan as a deposit. For instance, a $500 secured loan might require as low as a $25 deposit. This would be helpful as a personal loan for a new pool since you are receiving more than you are depositing. Also, some require no cash deposit but another form of collateral, like a piece of property. This would also be helpful as you are putting down no cash at all.

Retailer Financing:

In some cases, the retailer selling you the pool with provide financing. This is just a personal loan for a pool through that retailers credit partners. While not always, this can be the best way to go sometimes if you catch the promotions. During sales, they offer things like “0% Interest for 24 Months” or something similar. I have seen 0% interest for up to five years. If you can qualify for this financing, you can make a plan to pay off your new pool during the no interest time and save a ton of money.

Where to Find a Personal Loan for a Pool

All of the aforementioned loans can be found both online and offline, even the retailer financing. While everyone has their preference, I would much rather apply online. I do not have to leave home to do it and through platforms like Loanry, I can search multiple lenders at once. Trust me when I say that this is much simpler than doing so in person or one at a time. However, if I had a good relationship with a credit union, I would also consider applying there since they usually charge lower interest than many lenders and have favorable repayment terms. The choice is yours but the more time you can save yourself, the better- at least in my opinion.

What to Do Next

Many people I know who get a personal loan go through all that they need to get approved, purchase or pay the item they got the loan for. And more often than not they forget that the loan will be coming due. Suddenly, they are struggling to pay a payment that should not be a surprise at all. Let’s try to prevent that with you. If you get a personal loan for a pool, take the following steps to stay on top of it:

  • Be sure that you know and understand your payment, payment date, interest rate, whether there are any early payoff penalties, and who to contact in case the worst happens.
  • Write the payment date on a visible calendar and add an alarm on your phone so there is no way it sneaks up on you.
  • Budget the payment in. Do not think that it will magically take care of itself because it will not. Add the payment to your budget and figure out if you need any extra cash to make the monthly payment. If so, start working on that quickly.

One more thing: enjoy your new pool.

Yes, you need to pay for it but, honestly, if you are not enjoying it, what is the use of being in debt for it. My biggest rule when it comes to debt is that I am not going into debt for something that I or my loved ones will not benefit from. Enjoy it as often as you can, especially if your summers are short. In Alabama, we can usually get away with swimming from the end of April until sometimes November. One year, I was sweating on Christmas Eve (it’s very strange weather around here). However, some people do not have that many warm days, so swim as much as you can.

Conclusion

In the end, a pool loan is just like any other personal loan. You borrow the money and you have to pay it back. If you do not, it can mess up your credit that you will likely need again in the future. One way to do this is to personal loan shop for a new pool. Look for the lowest interest rate and best repayment period you qualify for. Then, be responsible and diligent in making your payments.

What is A Personal Loan Origination Fee?

There comes a time in everyone’s life when he or she needs a little extra money. It could be because you want to make a big purchase for a house or car. It may be because some unexpected emergencies occurred and you need money fast. No matter the reason, it will happen to you at some point. You are going to need a loan. As with anything, there is a good way to go about getting a loan. There is also a terrible way to do it. I am an advocate of doing things the smart way. That involves learning as much as you can about the process so you can make sound decisions.

What is an Origination Fee and How it Impact Personal Loan

Lenders are not always the best at explaining all the little details. Personal Loan Fees Details like fees, such as a personal loan origination fee are often hidden in the fine print.

A personal loan origination fee is a combination of several different fees. Really this makes things easier for the lender. They hit you with this one fee that is some percentage of your loan, perhaps 10 percent, to cover all of their administrative costs like filing the application, running a credit check, and sending the money to your bank account. Continue reading to find out more details about personal loans, including a personal loan origination fee and where to get a personal loan.

Origination fees are often just a percentage of the loan amount and in most cases is somewhere between 1% and 8% on typical personal loans in the United States.

Smart Money Tip!

Your origination fee could be determined by total amount of the loan, your credit profile and how long the loan term is, the purpose of the loan and even if you have a co-signer. It depends on the lender. As you shop lenders, it’s critical you ask them about origination and other fees. Most likely they won’t negotiate and if you don’t like the deal don’t be afraid to walk away.

What Fees Are Associated With A Personal Loan?

Every loan has fees. You just cannot avoid it. You should, however, know what they are and try to minimize them as much as you can. Whenever possible avoid an application fee. Some lenders charge you just to fill out the application. You pay this whether you are approved or not. You must pay this fee out of pocket. It is usually a small fee, less than $50. For me, it is the principle of the matter. A lender charging this fee is just looking to get some quick money out of you. Avoid it whenever you can. Most other fees you cannot negotiate.

Remember the personal loan origination fee from earlier in this article? Usually, this is an application fee and administrative fees rolled into one. This fee is for the cost of the application, running a credit check and handling all the administrative pieces of your loan. This fee does not come out of your pocket. It comes off the top of your loan. What this means for you is, if you ask for a $5000 loan and the lender charges a 10 percent personal loan origination fee, that means the lender is taking $500 off the top of your loan. You only see $4500 of the loan right from the start.

What Is The Process For A Personal Loan?

The process for a personal loan may seem daunting. It is not as bad as it may seem, once you understand the personal loan process. The first step is knowing why you want the loan. This guides what type of loan you need. For example, if you want to consolidate debt, you would not apply for a mortgage. Then you should do a little bit of research to find loan places that meet your needs. You want a loan that fits your budget and has an acceptable interest rate. When you have decided where to apply for your loan, be sure to take a look at the fees, including the personal loan origination fee.

If you’re thinking “Oh my, this process sounds incredibly intimidating!”, we agree. Another thing you can do is let Loanry try to help you. We partnered up with Fiona to bring you the best lenders for your needs. All you need to do is enter your information and see whether you could be paired up with lenders which may make you an offer within the next couple of minutes. You can start here:


Once you have done that, now it is time to apply for the loan. Depending on your lender, you may be able to apply online. Either way, you must answer a list of questions, including income, rent/mortgage payments, and identifying information such as name, address, and social security number. Depending on the lender, they may ask more detailed questions. You will have to provide documentation for proof of income and a picture ID. The lender does a credit check. You agree to that as part of your application. Then, you wait for the decision.

Other Loan Phrases I Should Know

When you are applying for a loan, you should read all the documents carefully. I know many people do not because it is full of a bunch of words most people do not know. I’m going to help you out by defining some loan related terms here for you. I talked about a personal loan origination fee above and that is a big one that you should understand.

An unsecured loan does not have any type of collateral attached to it. These loans a riskier for the lender and typically have a higher interest rate.

A secured loan has collateral attached to it and are less risky for the lender. These loans have lower interest rates.

Collateral is a tangible asset that you attach to your loan. You are promising to pay the loan, or you will give up the asset to the lender. Your car is considered collateral in an auto loan, the same is true for your house and a mortgage.

Default is when you do not pay the loan as promised.

Interest is basically what the lender charges you to allow you to borrow money. The interest has an annual percentage rate (APR) which you pay for the life of the loan. The lender has some flexibility in what they charge you in interest. The lower your credit score is, the higher your interest rate.

What Else Should I Know About A Personal Loan?

I have briefly touched on interest above, but I would like to bring it up once more. I want to make sure that you have a full understanding of the impact of your interest rate on your loan. Also, I am going to use an example to highlight how interest impacts your payment. This is purely an example, these numbers are not accurate. You want to borrow $4,000 and you need $4,000, but you know the lender has a personal loan origination fee of 10 percent. That means borrowing $4,000, you only get $3,600. Now, you need to borrow $4,500, which means after the 10 percent personal loan origination fee, you get $4,050.

Let’s see what interest does to that $4,500. You have pretty good credit, so your interest rate is 10 percent. That means you are paying $450 on top of the $4,500. Now, your total loan amount become $4,950. Remember you only wanted to borrow $4,000. Let’s see how that breaks down per month. You only want a loan for 36 months. That means your monthly payment is $137.50.

Let’s see how that changes when your credit falls into the bad zone. You have bad credit, so your interest rate is 20 percent. You are borrowing $4,500, so your interest amount is $900. Now, your total loan amount becomes $5,400. Over 36 months you end up paying $150. Your payment has now increased by a little over $20 per month. That may not seem like a lot of money to you, but for some people it is significant.

The Ugly Side Of Personal Loans

Often times when you are looking for a personal loan, you are in a position where you need the money. This can be a scary place, especially if you do not know much about the loan process. Think about it, you are desperate for the cash and you take the first loan you can get. Most likely, you will fall into a personal loan trap. Loan traps can take the shape of many different things. It can mean ridiculously high interest payments. It might mean an astronomical personal loan origination fee.

Keep in mind, there are many people out there preying on those in vulnerable situations. They are looking to scam you. If you make a quick decision without thinking it through, you might get caught up in a scam. You need to be aware of the lender you are using. Use a personal loan checker to make sure you are getting best deal. Read all of the fine print to understand their fees and interest. You should not jump into a personal loan without knowing all the information.

My Credit Score Scares Me

Does your credit score scare you because you do not know what it is? Perhaps you do not understand it and find it scary. A typical credit score range from 350 to 850. Most people have a credit score somewhere between 600 to 750. Good credit falls somewhere between 670 to 800. Anything below 570 falls into the danger zone of bad credit. When you have bad credit, it is much harder to get a good interest rate. You may also find that you have a higher personal loan origination fee and it is difficult to be approved for a loan.

You should pull your credit report and look at your credit score once a year. This helps you remain in control of it. You can also check it for errors, so you can address them. If you do not know your credit score, you cannot do anything to improve it.

How Can I Fix It?

The good news is, you can always work to improve your credit score. I will not lie to you, it takes hard consistent work, but it is possible. You must be focused on the goal of repairing your credit. Start by creating a positive payment history. That means you need to be sure to pay all your bills in full and on time. Obtaining a personal loan may help you to improve your credit because it allows you to work on a positive payment history. You may have to shop around for a loan that meets your budgetary needs. You also want to make sure you are hit with a high personal loan origination fee.

I’m Not Sure I Can Afford A Personal Loan

This is the first question you must answer for yourself. Only you can decide if you can afford a personal loan in your budget. You need to look at your budget and determine how much money you can pay in a monthly loan. If there is not extra money, stop there. You cannot afford a loan and should not even consider one. Doing so only puts you in a terrible financial position. If you think you can afford a loan, be realistic in what you can afford to pay each month. When you think about how much you want to borrow consider the personal loan origination fee and interest rates in your calculation.

I Am Terrible At Budgeting

Creating a budget for yourself is key in controlling your finances. Sometimes, when I talk about budgeting, I swear I can hear people groan. No one ever wants to put themselves on a budget. If you think about it, there is not other way to control your spending and make sure you have money for all of the things you need, and some of the things you want. You need to make it a habit and then it gets easier. There are so many budget apps and websites available for free. It is silly for you not to use one to put yourself in a better place.

How Can I Save Money?

Saving money may not seem like a viable option for you. It is hard, especially when you feel like your money is already spent before you earn it. There are many ways to save money. However, it takes practice and it means giving up some things. You can think of it as a temporary solution until you have some breathing room with your finances. Take a look around your house and see if you have items you can sell. This is a quick way to make money and clean your house of clutter. Consider getting a part-time job to earn some extra cash.

Take a look at your spending and cut out those daily coffee stops, or lunches out. Limit your meals out to once a week so that they become special events and not everyday occurrences. Consider getting rid of your tv for a few months. You can save a lot of money and invest that time into doing something more meaningful.

Are There Any Other Options To A Personal Loan?

There are many alternatives to a personal loan from a traditional lender. You could consider borrowing money from family or friends. This eliminates the extra money spent on a personal loan origination fee and interest. Instead of borrowing money at all, you can save money for the items you need, or want. This prevents you from having to borrow any money at all. That way you would not have to take on any more debt.

Conclusion

The most important thing you should take away from this post is the fees associated with a personal loan. You need to pay attention to things like the personal loan origination fee and interest rates. These things add on to the amount of money you borrow. If you are aware of them, you can do some research for the best rates.

Including a Personal Loan Payment in Your Budget

Most of us have considered taking out a personal loan for one reason or another. We may have a big expense to cover like a wedding, a new car, or even the birth of a child. The loan itself is usually not the point of concern for most people, however. Most people wonder how they will fit a personal loan payment into their budget. This can be tricky if you’re already cash strapped and burdened by a lot of debt. However, it can be done. A personal loan can often be beneficial to your credit if it’s handled properly.

In addition to helping you afford a big purchase or investment, it can also help build your credit if you make your payments on time and follow the terms of your loan. As a result, it’s a good idea to understand how personal loans work and why having a budget is essential to effectively maintain a personal loan.

Make a Plan For a Personal Loan in Your Budget

There are many reasons why a person may be led to apply for a personal loan. For many, an unexpected expense may come up that supersedes their credit card limit. For others, they may not have a credit budget that will allow for a particular purchase or they may not have a credit card. In addition, you may want to start your own business and lack the funds for all the things you’ll need to do, both planned and unplanned. In addition, some of the reasons for seeking a personal loan may be to simply sustain yourself or your family during a financially difficult time. For example, you may be interested in getting a personal loan to pay your rent. Regardless of the reasons, there are a variety of different situations that may lead a person to seek a personal loan.

Knowing Your Budget Before Getting a Personal Loan

Most of us have a budget that we adhere to on some level. If you don’t, you should. A budget is your financial roadmap. It helps you maintain your lifestyle and pay for the things you need as well as want. This is why it’s a good idea to create a budget if you haven’t already. Creating a budget helps you to create a financial roadmap that guides what you can and can’t afford. In addition, before you apply for a personal loan, it may be a good idea to use a loan checker. A loan checker is a tool that helps you to determine how much you can afford to borrow.

This is a beneficial tool because every credit inquiry has the ability to negatively impact your score, especially if your loan application is rejected by a lender.  A rejection also means that you will probably end up applying for another loan which will result in another credit inquiry. Another inquiry may also have a negative impact on your credit. Use a loan checker to determine how much loan you can afford. This will help you to determine the best amount to borrow and may help improve your chances of getting approved for a personal loan. This should be a part of your budgeting tool. This tool will really show you how much you can afford to borrow based on your current financial situation.

Or, you can also use Loanry! We connect you to reputable lenders quickly and efficiently. By filling out this form below, you allow us to research the database and find unique offers suitable for your situation. Sounds good? You can see if you can get a loan, right now:


Your Budget vs. Your Personal Loan

Logically speaking, your existing budget has to cover both your current obligations and your personal loan payment adequately. This means that there are two factors that you need to consider heavily: How much you need to borrow and the amount of Personal Loan Payment you can pay back monthly and still cover your other financial obligations.

Before you fill out any paperwork, these are the two factors that you should actively research and consider. Keep in mind that shorter repayment terms coupled with a smaller loan amount will produce a cheaper interest rate. Once you’ve considered all these pertinent points, you can effectively determine how much to borrow and for how long. This lets you know how much your personal loan payment should be in order to comfortably fit into your budget.

We really like this budgeting application from Every Dollar. They have great features that connect with your bank account. Just drag your expenses to the right spending bucket to begin. Beyond budgeting, here are some other financial apps we really like…

Consider Your Interest Rate

Most of us understand that the interest rate applied to a personal loan greatly determines how much you will have to repay. This is why this is an extremely important area to consider. Typically, banks offer smaller interest rates for larger loans and bigger interest rates for smaller loans. However, it’s best not to borrow more than you actually need and to carefully negotiate an interest rate that won’t increase your repayment amount excessively. This is why you should pay close attention to the annual percentage rate (APR), which is the amount of interest that will accrue and be added to the original loan amount. If you need to borrow less than five thousand dollars, consider other borrowing options besides a personal loan.

Three Additional Considerations…

Sometimes, it may make sense to borrow a little more if you can benefit from a lower interest rate. Conversely, it may sometimes make sense to borrow a little less if it means that you can reduce the amount of interest that your loan will accrue. However, if you want to borrow a particularly small amount of money, a personal loan may not present the best option due to the fact that the interest rate may be a bit higher. You may want to consider other options if you need to borrow a relatively small amount of money. A credit card or some other form of a loan with more flexibility may be a more viable option.

Advertised Interest Rates

The interest rate you’re approved for may be different from the interest rate advertised. Several variables determine the interest rate a person may actually pay. A person’s creditworthiness will determine the interest rate that a lender will offer as well as whether or not the lender will offer a personal loan at all. In other words, advertised interest rates are not guaranteed. Interest rates are based heavily on your credit score.

Budget Budget Budget

The key to managing your personal loan is budgeting. They actually go hand in hand. However, many people don’t understand why this is important and exactly how a budget should be created and how it should work. However, it’s not difficult. Budgets set guidelines for spending and let you know when to cap your spending. The most effective budgets are simple and function by helping you keep an eye on where your money is going.

Creating Your Budget

Divide your expenses into categories. Use broad general categories because it’s easier to track your spending. Your budget should help you to set aside money for your bills and other necessities as well as your Personal Loan Payment. The budget you create should help you to appropriately divide your expenses and Personal Loan Payment into groups that allow a certain amount of money for each bill or necessity.

A Personal Loan Payment is another bill. As a result, you may need to work on your budget and possibly cut back in other areas to effectively cover your Personal Loan Payment and your other expenses. In addition, there are many apps that can help you create an effective budget regardless of how much money you make. Keep in mind that your Personal Loan Payment will have to fit in with all the other bills that must be paid.

Step One

Create your budget before the month begins. Anticipate irregular payments that you may have to make. This will help in the event you have to rearrange your bills. If your bills are consistently the same from month to month, use your default budget as a foundation and make adjustments as needed. Your Personal Loan Payment should always be figured in. If necessary, less important bills can be rescheduled or worked out. However, make sure that you make your Personal Loan Payment on time. Late payments and missed payments reflect poorly on your credit and may have more of an impact than a late utility payment.

Step Two

Create a budget that exhausts all of your income. In other words, budget every dime of your money. Account for everything. In essence, this is similar to having a GPS that allows you to track everywhere your money goes. You can put your budget together by combining all your income sources. The first set of bills you should consider are your fixed expenses, like your Personal Loan Payment. This also includes utilities, groceries, and other expenses that accrue on a monthly basis. Next, track all of your other common monthly expenses like your household purchases and entertainment. Make sure every cent is accounted for. If you still have money left over, put it towards your savings or your Personal Loan Payment.

Step Three

Keep a close eye on your spending habits. This will ensure that you’re not overspending and that you’re adhering to your budget. This will also alert you if you have some out of hand spending habits. If there are areas where you’re overspending, recommit to your budget or increase it if the reasons are compelling enough. In addition, make adjustments to your budget as needed. A good budget is one that adequately fits your financial situation. As your finances change, your budget should too.

Be Realistic!

Your budget should be functional and reflect your needs wants and financial goals. However, they must also reflect your current monetary status. If you’re in a period where conservative spending should be an obvious goal, make sure your budget reflects this. In other words, eating at five-star restaurants shouldn’t be a part of your budget if you’re barely scraping by. This is especially significant if you have a Personal Loan Payment that you must honor. Failure to meet your financial obligations, particularly your loans, can result in financial ruin. Be responsible and spend accordingly.

The Unexpected

There are always going to be unanticipated situations that pop up and may place demands on an already strained budget. This is why it’s a good idea to budget for the unexpected, as much as you can. You may want to create a miscellaneous budget for these unexpected happenings that can often occur in life. Even your personal loan payment can become hard to pay if you fall under financial hardship and don’t have money set aside to cover the cost. This is why it’s a good idea to budget for the unexpected as well as the expected.

How Do Personal Loans Work?

A personal loan is different from a car and house loan, or any type of loan designed for a specific use. People take out a mortgage to buy a house and apply for a car loan for the express purpose of purchasing a car. A personal loan can come from credit union, bank, or online lender. Generally, they are paid for in two to five years. In essence, a personal loan can be used for any purpose and doesn’t require any collateral. However, it is possible to get a secured loan backed by your car or home which often means that the interest rate may be lower. However, generally speaking, a personal loan does not require any collateral, unlike buying a house.

A personal or consumer loan can be used for any purpose from paying off a high-interest credit card to funding the next family vacation. Typically, personal loans tend to have lower interest rates than credit cards. This is one of the reasons why they are attractive. Once you’re approved for a personal loan, you get the requested amount in one lump sum and make personal loan payments until it’s paid. Although personal loans are fairly simple and straight forward, you should pay attention to the terms and negotiate the best possible interest rate. The terms of a personal loan can vary from lender to lender and this is why it’s important to do your homework and read the fine print.

What to Watch Out For?

As part of your homework, it’s a good idea to know what to watch out for before you take on a personal loan. Familiarize yourself with the pitfalls. One of the things you should pay attention to are excessive fees. Many lenders will charge an application fee in addition to other fees that may add up. However, there are additional fees that you should pay attention to as well and these fees can be quite high. You may be offered loan insurance which would cover your personal loan payment if something were to happen to you or in the event of your death. This insurance can create peace of mind but it will come at a cost. Can you truly afford the cost of this peace of mind? If so, no problem. However, soberly consider whether or not you can afford this cost in addition to your personal loan payment.

Keep in mind that these fees add up and some can be quite expensive. Use wisdom and never lose sight of your budget and how much you can afford to pay. It should be noted, however, that most lenders won’t ask for upfront fees before you get the loan. The fees you’re charged after you’re approved for the loan will be a part of your loan and they won’t be asked for in advance. However, pay attention to

Buyer Beware!

Common Personal Loan Traps: Fees, Rates, Oh My!

Part of your homework is to keep a close eye on any and all fees a loan may require, in addition to interest rates and terms. However, there are other things that you need to be aware of as well. Any lender that has a legitimate shingle must be registered in the state that they are doing business. In other words, even if they are licensed to do business in another state, in order to legally operate as a lender, they must also be licensed in the current state they are attempting to operate a business in. As part of your do-diligence, make sure that the lender or lenders you are considering are legally licensed to operate. Keep in mind that the rules for lenders will vary by state, but licensing is required in every state which represents a different jurisdiction.

People with Bad Credit Often Opt for…

In addition, many people who have low credit scores or no credit, often opt for fast loans to help solve some of their financial woes. They may consider these types of loans because their credit is not good enough to get a personal loan. However, although its often quick and easy to get these loans because they are based on your job and the amount of money you make, they often carry large interest fees. These interest fees can be quite high and just how high they are can vary from state to state. Each state has its own rules and guidelines. Furthermore, it’s best to avoid these types of loans because they are often seen as predatory because of the terms and the extremely high-interest rates. If you choose to take out a fast loan, try to pay it off as soon as possible.

The longer you have it the more interest you accrue on these high-interest loans. Often, your personal loan payment for a fast loan is nothing more than the interest. In the end, you’ll still end up paying the original loan amount in addition to the high-interest rate.

Worst Case Scenarios

Getting approved for a personal loan can eliminate a lot of financial worry for people. In addition, a personal loan can be beneficial because the interest rates are often lower than credit card interest rates as well as other types of loans. However, regardless of how little you have to pay, if you don’t have the money to make your personal loan payment it can be very stressful and scary. Most of us would worry about the consequences of not being able to make a personal loan payment.

Life can throw us many curveballs, and a personal loan payment that was manageable before can become difficult if we lose our job or have to pay bills for a loved one. The wide variety of situations that can occur that could change our financial status can be limitless. However, if you do fall on hard times and have to make a late payment, miss a payment, or find that you can’t pay your loan back at all, be sure to talk to your lender as soon as possible. There may be things that can be done in the event of an unforeseen and unfortunate circumstance like this. In some extenuating circumstances, a lender may be able to offer you a moratorium. This is an extended period where loan payments aren’t required and you aren’t penalized.

Default

However, your lender may not give you a reprieve for a missed payment or for your inability to pay back a personal loan. If you miss a personal loan payment, you may be faced with the possibility of defaulting on your loan if it is more than two weeks late. Many lenders have a two to four week grace period for personal loans. During this period, additional interest doesn’t accrue. However, if your late payment exceeds the two or four week grace period, you may begin to get letters regarding default from your lender and your credit score could plummet as much as 150 points. However, most lenders won’t threaten default until your personal loan payment is ninety days late.

A Personal Loan and a Budget should Go Hand in Hand

You shouldn’t apply for a personal loan without a commitment to maintaining a budget. A budget will ensure that you can make all of your personal loan payments and maintain your other financial obligations as well. Plus, a budget helps you to determine how much loan you can afford and reasonably fit into your current lifestyle. Failing to budget is similar to planning to drop or neglect a financial obligation which could result in unsatisfactory changes in your credit and in your lifestyle.

If you have a family, this could mean the difference between putting food on the table, paying your rent or mortgage, or simply having enough money to pay for a much-needed car repair. Before you take out a personal loan, commit to creating a budget if you don’t have one. If you do have one, stick to it and make adjustments as needed. All of these actions will help you consistently make your personal loan payments and effectively manage your finances.

Conclusion

A personal or consumer loan is a big responsibility, even though the financial benefits can be quite helpful. However, a personal loan requires a certain level of personal responsibility and that begins with a thorough understanding of how personal loans work and a solid budget to ensure that you can meet the terms of your loan agreement.

How to Get Pre-qualified for a Personal Loan?

Everyone comes to a point in their lives when he or she needs a loan. It is impossible to own things without having to borrow money in some way. That may be a mortgage for a house, a loan for a car, or credit cards. These are all basically loans. I know finances can be a difficult subject. Often times, people do not want to talk about money. However, you cannot hide from it. The more you understand about loans and finances, the better you are. Once you know all the information, consumer loan options are not the scary. Keep reading to become more informed about loans and getting pre-qualified for a personal loan.

What Are Personal Loans?

If you think you are interested in obtaining one, it is important first to understand how personal loans work. You probably have a basic understanding, but when it comes to obtaining a loan, the more information you have, the better. Let us start with the basic information. A personal loan is when a lender allows you to borrow money. You then agree to repay the loan with regular, scheduled monthly payments for a set amount of time. The length of time is typically anywhere from three to five years. You are given the money in one lump sum. Most of the time, it is deposited directly into your bank account. Personal loans can be secured or unsecured. Sometimes, you can be pre-qualified for a personal loan.

There are typically fees associated with personal loans. The fees that you might see are an application fee, an origination fee, and an early termination fee. There also may be administrative fees and late fees. Be sure to read the fine print of any documents you sign. The loan documents outline all the fee associated with your loan. Of all the fees, the one you should avoid is an early termination fee. This fee is applied if you choose to pay off your loan early. Not all lenders add on this fee, but some do, so be aware. Lenders make money on a loan when they collect interest from you. If you pay off the loan early, the lender will losses all the money they would get from your interest.

How Can I Get Pre-Qualified?

Now you want to know how to get pre-qualified for a personal loan. I am sure that you would like some magical answer that makes everything simpler. I do not have one for you. The best thing you can do for yourself when it comes to getting pre-qualified for a personal loan is take care of your credit score. Keep your credit score in good shape and you will not have any lending worries. That is honestly the best thing you can do for yourself. You do that by pulling your credit report on a regular basis. You should do it once a year to check for errors. This also allows you to see your credit score, so you know where it is.

Pay your bills on time and in full. Whatever the amount is that you owe, pay it and pay it on time. Reduce the amount of debt that you have. Make sure your debt to income ratio is not off the charts. I know these tips are not setting the world on fire. But, these tried and true ways are the best way to protect your credit score. You can also get some stability in your life, if you do not have it. Do not bounce around from address to address. Make sure you have some stability in your job. I know many millennials try not to stay in one job for a long period of time, but that can hurt your credit.

Pre-qualification Steps for a Personal Loan

Getting prequalified is not a difficult process. Lenders do different things, but here’s are common practice. 

Step 1. Find one or more lenders. You can find a lender here.

Step 2. Give the lender some basic information, which may include contact info and other information

Step 3. Make sure it’s a soft inquiry. The lender can perform a soft credit inquiry (sometimes they will want to do a hard inquiry and this will effect your credit score). Then you can decide if you want the loan.

Why Should I Get Pre-Qualified?

Now you know the terminology, you may be asking yourself why should I get pre-qualified for a personal loan? Well, there are a few good reasons why you should considered getting pre-qualified. One of the obvious ones is that it can help you understand what options are available to you. While it is not a guarantee, it can give you some direction as to which loans you may qualify. This can all happen without any impact to your credit score. As we become more technologically advanced, the tools lenders use to pre-qualify someone are becoming more spot on.

This means that you can have a little more faith in the pre-qualification you receive. As with any potential loan, be sure to read the fine print. You should always know what you are getting yourself into. Be sure that you understand all of the information contained in the contract. You do not want to put yourself in a worse financial position by obtaining a loan that has loop holes. You also do not want to get a loan that you cannot afford to pay back.

What Is The Difference Between Pre-Approved and Pre-Qualified? 

Difference of being Pre-Approved vs. Pre-Qualified for a Personal Loan?

You have probably heard the terms pre-approved and pre-qualified and wonder what in the world is the difference. Well, there is not always a difference. Depending on the lender, some of them use the two terms interchangeably and they mean the same thing. You should make sure that you understand what the lender means by either of those terms if the lender is using them. Do not just think you know, make sure you know. You do not want to go into any loan process with assumptions about how it will work. Ask questions and get the answers you need before you sign a contract.

Typically, either term can mean that a lender has done a soft hit to your credit and done a cursory look at what is on there. One of the major differences between and soft hit and a hard pull is the details that the lender can see. When they have done a soft hit to your credit, it does not impact your credit score and they cannot see all the details that are listed on it. When they do a hard pull of your credit report, they must have your permission and it could impact your credit score slightly. More importantly, they lender can see all the details of the items that are listed on your credit report.

Another thing to keep in mind is just because you have pre-qualified for a loan does not mean you will be approved for that loan. The lender still reserves the right to deny your loan. Make sure you read and understand all of the fine print before you sign any contracts. While it is nice to be pre-qualified for a personal loan, you do not have to be for approval.

If I Am Pre-Qualified, Can I Get A Lower Interest Rate?

So, you may be asking what does getting pre-qualified for a personal loan do for me? The truth is getting pre-qualified for a personal loan in and of itself may not get your a lower interest rate. However, your good credit score that got you pre-qualified for a personal loan may help you get a lower interest rate. Hopefully, you know by now that the lower your interest rate, the less money you pay back for your loan.

You want to get the lowest interest rate that you possibly can. I have mentioned it a few times, but knowing what is on your credit report goes a long way to helping you. Once you know what is there, you can work to do a few things. You can get rid of anything that is incorrect. Working hard to pay off some of your debt and decrease your debt to income ratio is another solution. You can also be prepared to explain the questionable items on your credit report. Sometimes, if you can provide an adequate answer to a lender about something that is on your credit report, that is helpful for you to get a better rate.

What Does My Credit Score Have To Do With Being Pre-Qualified?

Your credit score has everything to do with it. Credit score is one of the major things a lender will use to determine if you should be approved. Your credit score is a history of your payments, what you owe, and how long you have had a credit history. Missed and late payments are the most common reasons for a low credit score. It only takes a few of those before your credit score plummets. The good news is there are steps you can take to improve your credit score.

You credit score can dictate getting or not getting many things in your life, a house, a car, even a job. You want to protect your credit as much as you can. If something does happen and your credit is negatively impacted, there are some things you can do to improve it. The first thing you should do is credit shop. You want to look at your credit report to look for any errors. You should always make sure the negative items that are reported are actually yours. If not, you should dispute them and have them removed.

Make sure you pay all your bills on time. Avoid late and missed payments for they always decrease your credit score. You should also work hard to pay down the debt that you have. Decreasing the amount of debt that you have on your credit report is one of your top priority. You also want to decrease your debt to income ratio to increase your chances of getting approved for a loan. Decreasing your debt can help you get pre-qualified for a personal loan.

Can I Get A Personal Loan With Bad Credit?

Yes, even with bad credit, you can still get a loan. However, it may be a little more difficult to get approved for a loan. First, you should know what your credit score is, so you know where you stand with lenders. When you do not have the best credit, you should shop around for the best loan for you. You could use a loan checker to search the top loan for which you qualify. Another thing you should know about bad credit is that usually means a higher interest rate.

Lenders see those with bad credit as a risk. Sometimes, a lender will not want to give you an unsecured loan and they want you to have collateral. When you have collateral, you are providing some type of property as a promise that you will pay back the loan. If you default on the loan, the property becomes the ownership of the lender. You can also get a co-signer, if your credit is bad. A co-signer promises that you will pay back the loan. If you do not, your co-signer is responsible for paying the loan.

Are There Different Types of Lender?

There are many different types of lenders. The most common lender that has been around forever is a typical bank. There are also credit unions. They are similar to banks, but they tend to be less rigid. Plus, they are more willing to loan money to someone that has bad credit. They are more like a neighborhood bank and want to help people get back on their feet.

Then there are online lenders. It is possible to get a personal loan online with bad credit.  There are some other types of more non-traditional lenders available, also. Also, consider peer to peer lending. There are organizations that are set up online where individuals or investors can loan money to you. Everything goes through the organization. The investor gives the money to the organization and you pay the money back through the organization. Typically, the interest rates are lower than you might find at a traditional bank. They do look at your credit but small marks are not as important to these types of lenders. You can also borrow money from your family and friends. Most of the time, they will let you borrow money with little to no interest.

You can use a third party to set up a loan agreement, so that it all remains legal. You can even borrow money from yourself. If you have a business that is making money, or vice versa and it is your business that needs the money. You can lend yourself the money and pay yourself back with regular payments. The best thing about these types of loans is that you do not need to be pre-qualified for a personal loan.

Are Online Lenders Safe?

Typically, online lenders are safe and you can feel confident when borrowing money from them. However, there are always people looking to scam others, so you need to aware and research any online lender you are considering. The benefits to an online lender is the application form is shorter and the approval time takes much less time. You can typically get an answer in 24 hours. Here on Loanry, you can find reputable lenders and consider applying for a loan with them.You can even put in your information in the form below, and get offers from lenders who would potentially lend you money within seconds. So if you are interested in a loan, start here:


If you are approved, the money is in your account within 24 hours of approval. Traditional lenders have a lot more paperwork for you to fill out. They always want you to go into the branch and talk to them in person. Online lenders require much less documentation, as well. Many times, online lenders send you letters stating you are pre-qualified for a personal loan. When considering an online lender, you must understand that your interest rate is probably going to be a little higher than if you went to a traditional bank.

What Should I Look For In A Lender?

You know you want to get a personal loan. You would even like to be pre-qualified for a personal loan. But, now you are trying to determine which is the right lender for you. There are some things in which you should look to determine if a lender is right for you. You want to make sure that whichever lender you choose, they give you the money you need.

If you are approved for a loan, but it is for $5,000 than what you need, it is not going to do you much good. You need to find a reliable company that has the backing to give you the money you seek. You need a lender that is flexible. Sometimes, traditional banks are a little too rigid. However, credit unions and online lenders are a little more flexible to whom they will lend money. Lending institutions are governed by federal laws.

Do not take a lender who is going to break the rules!

You do not want a lender that is going to break the rules. However, you do want one that can work with you. You want a lender that has excellent customer service and can be responsive to your needs. You want a lender that is approachable and you can ask any question you have. Someone that will sit and explain the entire loan and processing to you. You do not want to have the fine print hidden.

But take one that is upfront with the details of the loan

You want them to be upfront with the details of the loan. A lender with a solid reputation. You want to feel like you can trust the lender. The last thing you want is to borrow money from a lender that seems to have shady business practices. Doing a little bit of research about the lender goes a long way to help you get the best loan from the best company that will meet your needs.

What Can I Do To Improve My Chances Of Getting A Personal Loan?

https://www.loanry.com/blog/improve-your-chances-of-getting-a-personal-loan/

The answer is quite simple, although you may not like it. It should not come as a surprise to you, as I have said before. You need to reduce your current debt and increase your credit score. You need to work hard to repair any damage that you have done to your credit score. It is not always easy. Plus, it takes consistent and hard work. It is possible to improve your credit score. You need to take a look at your credit report and understand what is on there. Look at your late or missed payments. Is that information correct?

If it is not, you need to fix it. Making any corrections you can to the information on your credit report will help you drastically. If you cannot make corrections because all of the information is correct, you can try to contact the lender. Sometimes, if you make good on any late payments, or accounts that are in default, the lender will remove the late payments from your credit report. You must work to pay down your debt and reduce your debt to income ratio. While these things may seem tedious, they all will go a long way to help improve your credit score. This improvement does not happen overnight. It takes consistent effort on your part. But, it is possible to see improvement.

If you begin to correct all of these items, you begin to see your credit score increase. While your credit score increases, the possibility of a lower interest rate increases.

How Can I Use A Personal Loan?

There are many reasons why you might need a personal loan. In reality, you can use a personal loan for anything of your choice. The bank deposits the money directly in your bank account or gives you a check. Even though a personal loan can be used for just about anything, the lender always asks what you intend to do with the loan. There are some typical reasons why people apply for personal loans. A personal loan can be used to consolidate debt. This helps you combine all of your debts, including credit cards, into one payment per month. The keeps your payment each month the same because it is a fixed rate.

Another common reason for a personal loan is to pay for an emergency. It can be a medical emergency, or some other emergency that causes an unexpected expense requiring money fast. You can also use a personal loan to purchase a vehicle. This helps you purchase a car without having to pay for it all at one time. You may also use the money to make improvements to your house that ultimately increase the value of your house. You could use the money to pay for a wedding. Regardless of your reason for getting one, you can always get pre-qualified for a personal loan.

Conclusion

So, now you are pretty certain that you understand the details of being pre-qualified for a personal loan. Now, it is for you to decide if a personal loan is right for you. Just because you can get one, does not mean that you should. You need to make sure that getting a personal loan will help to improve your financial position. Do not put yourself in a worse place financially. You must ask yourself if you can afford to pay back the loan. Yes, it is nice to get a large sum of money directly deposited into your bank account. Remember, you have to pay back that money.

You have to pay it back with regular monthly payments. If you cannot afford those regular monthly payments, then you should not get a loan. Before taking on more debt, you should take a hard look at your current debt situation. You should understand your debt to income ratio and work hard to improve it. Do not forget that you are the only one that can decide if a personal loan is right for you. You need to understand your situation and if you can pay back the loan.

What Does it Mean to Default on a Personal Loan?

Before we get into the meaning of a default on a personal loan, let’s look at the numbers. It’s rare to find a business default on its loans, but in 2018 less than one percent did. Consumer loans or personal loans, on the other hand, is currently at a 3.63 percent default rate. The Federal Reserve only tracks bank loans, but personal loans have fewer requirements, thus are defaulted upon more often.

Delinquency rates (60 days or more past due) for personal loans is currently 3.63%. That compared to what the Fed saw in the first quarter of 2019 for other loans; 2.59% in credit card debt, and 2.12% delinquency rate in other types of loans.

The Department of Education reports that, in 2013, 11.5 percent of students making payments to repay their student loans defaulted on the loan after two years. Forty-four million students owe 1.5 trillion dollars in student loans, says Forbes, and student loan debt is the largest debt category following mortgages.

On the other hand, personal loan delinquency rates are relatively low when compared to historical numbers.  According to LendingTree, Personal Loan Delinquency Rates (60+ days past due) numbers “hit a high of 5.1% in 2009, the peak of the Great Recession.”

Those are the numbers. How is a default on a personal loan looked upon by lenders? For some lenders, default is missing one payment. For other lenders, it’s 30 days late, while more lenders tend to let some months go by before they consider a loan in default. Defaulting on a personal loan has consequences that lenders use without compunction to get their money back. What are the consequences?

The Legality Of Loan Defaults

First, you should know that a creditor can’t just toss you in the pokey for non-payment that puts you in a debt cycle. They must go through legal channels.

Collections

Before he does that, he’ll put your personal loan debt through collections. If, after some months, you default on a personal loan, he’ll put the debt out for collection. Debt collectors include lawyers, individuals, and companies that buy debts for collection. Methods of the collection include letters (some look like Western Union wires,) and phone calls.

It differs from collection company to collection company how long the calls and letters will continue. Most continue for 180 days. By that time, if the debtor (you) either refuses or simply can’t repay the consumer loan, the collector might sue you. The court will notify you of the court date, and it’s a good idea to show up. If you don’t, you’ll lose by default, and will end up paying not just the loan balance but court costs as well.

Another method of collection is selling your debt to a debt buyer. You will no longer owe the original lender. You will be dealing with the company to whom he sold the personal loan debt. This company will attempt to get you to pay up, so it won’t lose the money laid out to buy your debt. Be aware that there are law firms that buy loan debts. Letters and phone calls from lawyers tend to get most people’s attention, not to mention making their blood run cold. Either way, it’s a good idea to work with these people to pay off the debt.

Lawsuit

Expect to be sued if you’ve borrowed a significant amount of money and your assets are equal to or more than the amount borrowed. If you own a business, for example, then your physical property could be seized as well as your accounts receivable. When you default on a personal loan, a judgment from a court can be collected for up to ten years.

Collecting On A Judgment

This is the only time a creditor can legally reach into your bank account to take money in payment of a personal loan debt. The creditor can also seize any personal property worth the amount of consumer loan debt. Maybe, but doubtful you’ll see a sheriff knocking on the door with a court order for seizure of real personal property.

If you own a business, then it may be within his legal right to come to your business and take whatever cash is there including that in your pockets. The court could also assign to the sheriff to collect monies owed to you by customers and give it to the court. He could also seize any business property worth more than you owe on it to pay for the consumer loan debt.

On the other hand, creditors could not bother with all these physical collections stuff and simply put a lien on any personal or business real estate you own. Upon the sale of the personal or business real estate, this “judgment lien” is paid first.

Now that you know all of this, it would be a good idea to show up in court. You can always work with the judge and the creditor to iron out a payment plan that works for all concerned. You may or may not be required to pay court costs, but if you do, it would still be cheaper than losing all your property to pay off the fast loans debt.

Garnished Wages

Another tool for the collection of a consumer loan debt is garnishing wages. There are rules governing this as well. The amount taken from your net pay (after taxes and deductions) will be 25 percent. This is if you owe on a consumer loan or fast loans. If you own a business and pay yourself as if you would an employee, then your wages could be garnished. If you aren’t paid much, then the garnishment must be equal to 30 times the Federal hourly minimum wage, says Nolo.

Wages that cannot be garnished include retirement funds, disability, Social Security payments, unemployment, and worker’s compensation.

Also exempt from judgments are equity in one vehicle up to $5,000 and equity in a house up to $50,000, depending on your state. Check your state exemptions to be sure.

Paying A Collection Attempt

When things reach this pass, it’s a good idea to try to negotiate a payment plan that will fit your budget. After all, you did default on a personal loan because you couldn’t make the payments. Get a notebook and write down all your bills, loan debt, and income. Work out how much you can pay on the consumer loan debt. Even if it’s only $25, most creditors will take it rather than have to deal with the legalities of a default on a personal loan.

Most collections companies and lawyers will try to get you to settle the debt for a fraction of what it was. For example, they may tell you that they’ll settle the debt if you pay half of the original amount. What they do then is selling the other half to another collection agency or lawyer. Then you have to go through it all over again. Add to that the interest the IRS takes in all this, and you have a recipe for fright and frustration. For the sake of not getting a peptic ulcer, try not to settle.

How a Default On a Personal Loan Affects Credit

You wouldn’t have used a lender finder service to check if you could repay a personal loan if you weren’t worried about how the loan would affect your credit. The consequences of default on a personal loan vary from creditor to creditor. As I wrote earlier, a default can mean one missed payment, or it could mean several missed payments in a row.

Missed payments and derogatory remarks from creditors remain on your credit reports for up to ten years. These lower your credit scores and might even adversely affect your search for a job. You may have a more difficult time obtaining any other credit products such as loans or credit cards. Default on a personal loan affects your insurance rates as well as other financial products. They all check your credit reports, so they’ll know if you’ll repay their money.

How You Can Repair the Damage From Default On a Personal Loan

Working with creditors before your account goes to collections is the best way to handle repaying a loan. Their first attempt at collections is within their own company. Only after they fail will the collection be sent to an outside agency or collections lawyer. So your request for a payment plan you can afford should be attempted before the account goes to an outside agency. This payment plan attempt will positively affect your credit.

This can be accomplished in a couple of ways. If the lender won’t work with you, contacting a credit counselor will help. They will work with you to establish a budget within which you can pay your bills as well as the debt you owe and maybe have money left over. In some cases, the credit counselor works with the lender to establish a payment plan. They won’t make the payments for you; you still have to pay the lender. The credit counselor just paves the way for easier relations between you and the lender.

If the collections have reached the point of a lawsuit, then contacting a lawyer is your best bet. The lawyer will work with the court and the lender to establish a repayment plan. The judge will always rule in favor of the lender, but the lawyers will get a payment plan together. Be aware that you will be paying court costs, too, and these will be worked into the payment plan.

Work with Your Lender – Most of the Time They’ll Want to Help

If the debt owed is beyond the state’s statute of limitations, you can’t be legally sued. Collection agencies will still try it in order to get the loan repaid. However, though they can’t legally sue you, you still owe the money. It’s a good idea to negotiate a payment plan rather than let things go this far.

The only way to get out of a lawsuit is to tell the collections agency to prove that you owe the debt. The burden of proof is on he who brings the case. If you didn’t incur the debt, then the judge will dismiss the case. This is only if you didn’t incur the debt.

It pays to keep every piece of paper regarding the loan. To take collections off your credit, you’ll need documentation proving that you’ve paid off the debt in full. If you never owed the debt, you’ll need documentation showing this. Either way, send copies of the “paid in full” statements of the debt to the credit bureaus. Ask that any derogatory comments be taken off your credit reports.

You’ll also need proper documentation if there’s an error on your credit report. This would be the case if you’ve already paid the debt or if an incorrect item was placed on your credit. If collections agencies are still attacking you, lodge a complaint with the Consumer Financial Protection Bureau. Additionally, dispute the items with the Big Three credit bureaus.

Everything About Debt Settlement You Were Afraid To Ask

There are dozens of reasons for applying for a consumer loan

Using a service to help find a lender for seeing if you can afford a loan is good only insofar as you have the wherewithal to repay the loan. If you’re interested in getting a personal loan, maybe Fiona and Loanry can help you with carefully selected reputable lenders. You can enter your information and see if you qualify for a loan with any of them:


I’ve written some scenarios in which you might be unable to repay a personal loan. A default on a personal loan is a very serious matter and should be avoided at all costs. Here are examples of the many reasons to use a personal loan:

New Home Business

You took out a loan to pay for a stock for your new home business. You’ve advertised on social media, you’re doing email campaigns, and you’ve wrapped your car with information about the home business. No one has bought anything, though. Your first payment on the loan is coming up, and you don’t have the money to pay it. It’s not your style, but you’re considering default on a personal loan.

Dental Work

You needed dental work done rather desperately. Your insurance at work only paid for half of it, though. You needed a personal loan to pay for the other half. Then the unthinkable happened. You were hospitalized due to the inability to breathe. Mold was found in the house. You missed a week of work for which you won’t be paid. How are you going to pay the first dental loan payment?

Car breaks down

If your car breaks down one more time, you’re going to set it on fire. You’ve been late to work more days than you’ve been there. The boss notices these things. He’s advised you to get another vehicle, so you did. You’re not late to work anymore, but the loan you took out for the down payment on the car is coming due. Maybe the boss will let you work extra to make up the time lost. It’s the only way you can make the payments, so you won’t default on a personal loan for auto repairs.

Home Repair

As you were having work done on the sump in the basement, the workers showed you where your foundation had shifted. Now you understand the cracks in the walls and ceilings upstairs. You know this is going to take some serious money to fix, so you immediately call a consumer loan office after you use their loan checker to see what the payments will be. Then you decide you can pay the fast loan payments, but only if nothing else goes wrong. You won’t be able to pay for it if anything else happens.

It’s been an especially wet summer. While that’s good for the crops and the water table, it hasn’t done much for your house. The basement flooded, causing mold and bacteria to influence the indoor air quality. You’re going to need professionals to get rid of the water, clean the mold, and replace any woodwork and drywall affected by the water. That will wipe out your savings account. With what will you pay the bills? You might have initially used a loan checker service to look into home repair loans.

Emergency Medical

Your daughter was figure skating at the local ice rink. The instructor there told you she could be Olympic material with a little work. Your head in the clouds, you told her to take off her skates, because you had to be somewhere in a few minutes. As she skated toward the bench, she fell. Broken leg. Both you and the instructor were horrified. The doctor set the leg, though she wouldn’t be skating for months while it healed. The insurance paid for the whole thing. However, your daughter messed up her arm in the fall and no one knew it. You’d have to take out a consumer loan to pay for the arm, because the insurance people wouldn’t pay for the arm so close to paying for the broken leg.

Your daughter-in-law is in the hospital for complications following the birth of your grandson. Your son is at his wits’ end trying to work, take care of a newborn baby, and worry about his wife all at the same time. You call your local consumer loan office following using their loan checker. If fast loans are the only way you can get a plane ticket across the country to help, then fast loans it is. Your retirement fund is enough to repay the loan, so you won’t default on a personal loan. You don’t even worry about that, because your son needs help. Right now.

Need money until Payday

Your new job holds back a week on your paycheck. You’re paid every two weeks which means you won’t be paid for a whole month. The bills aren’t going to wait that long, nor will you be able to eat for a month. You’ll need gas in the car to get to work, too. It looks like you’ll be using a loan checker to get a consumer loan or even those fast loans they show in commercials on TV. As long as they’ll work with you on the timing of the first payment, you can pay your bills and eat. It won’t do to default on a personal loan just as you’re beginning a new job.

It’s not easy to watch the company you work for sending most of its work overseas. You understand the premise: it’s cheaper to send the work overseas where they pay their workers pennies per day. Having the finished product shipped back over here is cheaper than paying American workers. You understand it, but you don’t have to agree with it when they give you a pink slip. Thank goodness you work two jobs, or you’d be looking for personal installment loans online or going to one of those fast loan places you’ve heard about. Still, you could use another job just so you won’t have to default on a personal loan.

Conclusion

Generally speaking, people don’t take out a loan with the express purpose of defaulting on it. The default usually follows a financial disaster like the loss of a job or a medical emergency. I wrote about such scenarios at the beginning of this discussion. However, stuff happens. You do have choices, though, leaving you with at least one or two ways of repaying the loan.

If you foresee a situation in which you can’t repay a personal loan, act immediately. Lenders will always work with you to find a way to repay the loan affordably. They don’t want to lose their money, nor do they want to waste time with legal fights. You don’t want to see your credit ruined, nor do you have the time or the extra money for legal fights. So acting immediately is in your best interests.

Your credit is representative of your good name and financial habits. Credit rules our lives and all that we do. Ruining your good credit by defaulting on a loan, however unintentional, has lasting consequences. You want to avoid those consequences at all costs, so you will have an easier time of it in the future. Good luck, and God bless.

How Does A Personal Loan Effect Your Credit?

How Does A Personal Loan Effect Your Credit?

There are several things you need to consider before you get any type of loan and this includes the impact the loan will have on your credit. However, the primary determinant for this aspect is your credit profile. Sometimes a personal loan can help improve your credit scores and credit, especially if your primary purpose of taking a personal loan is to help pay your existing higher-interest rate debts. Before we can dive deeper into this issue, it is important to know what the definition of a personal loan.

Understanding the link between your credit score and personal loans requires you to know what a personal loan is first.

How a Personal Loan Affect Your Credit

A personal loan is a type of credit issued by credit unions, banks, or digital lenders. This type of credit makes it easy for people to make big purchases, bundle high-interest debt into an easy to manage low-interest debt, or start a business. A personal loan usually has a lower interest rated compared to credit cards. These types of loans can also be used to combine several credit card debts into monthly lower-cost payments.

While your credit profile can be a robust tool, signing off on any loan especially a personal loan can certainly be a serious obligation. Thus, it is important to weigh both the pros and cons of a personal loan and how it will affect your credit score.

A personal loan can affect your credit history and score when:

You Apply for a Personal Loan

A formal application of a personal loan triggers a thorough credit check that enables the loan checker to perform an evaluation of your credit history. This type of inquiry usually takes away at least five points from your credit score. However, new application accounts for at least 10% of your total credit scores. A thorough credit inquiry basically stays on your report for at least two years, but it can only affect your credit score during the first year.

If you’re interested in getting a personal loan online, you came to the right place. Fiona and Loanry bring you carefully selected reputable lenders. You can enter your information and see if you qualify for a loan with any of them:


You Shop Using a Personal Loan

A majority of online lenders allow borrowers to pre-qualify for a consumer loan using a soft credit check. This type of check is routine, as it allows them to establish your creditworthiness. A soft credit check will not affect your credit history and score, but it does allow you to shop around different online lenders for the best terms and rates. Loanry helps borrowers find a lender online.

You can do so, by simply visiting their website, as Loanry makes some of the information you require for registered online lenders available. Make sure you are not only comparing multiple lenders, but you are also considering whether the lender offers its consumers the soft check.

You Repay Your Personal Loan Regularly

Both VantageScore and FICO, which are the different credit scoring methods available, consider your payment, as the most critical factor when calculating your credit score. Your ability to repay your loan makes up 35% of your total credit score. Having a consistent record for on-time debt payments helps build your credit score in the long-term.

Most online lenders report their borrowers’ repayment activity to at least one or all the three national credit bureaus. These bureaus are TransUnion, Equifax, and Experian. Working with an online lender that reports your repayment progress to one or all three bureaus means that you have to be consistent with your payments, as this will help build your credit score and reports.

You Consolidate Your Debt

Consolidating your debt into a consumer loan can help improve your credit score, as it lowers your credit utilization. This means a personal loan affects your credit score in a positive manner. To determine your credit utilization, lenders simply calculate how much available credit you utilize. Personal loans help add installment credit to your reports, and this further helps to improve your credit score

You Miss a Payment

Another way a personal loan affects your credit is when you lack to make regular payments. However, it is important to note that missing a payment due date even by a few days cannot affect your credit score. But, when you make a payment towards your personal loan that is 30 days late, online lenders may report you to credit bureaus and this can damage your credit score.

For instance, if you have a FICO credit score total of 780, a 30-day delay in paying your personal loan can lower your score by at least 90 to 110 points. This means you will have moved from an excellent score to a fair credit score. Having a suitable budget that takes into account all of your required repayments including a personal loan, can help you avoid missing payments.

So, what happens when a personal loan effect your credit? Are there any ramifications that follow? The next section will focus on how your credit score affects your life.

How Your Credit Score Affects Your Life

Just like a personal loan affects your credit; your credit score can also affect your life. Even if you have a credit score that is as low as 500, you can still get credit, however, this comes with a rather high-interest rate or specific conditions like getting a secured credit card or depositing money. But as your credit score increase, you start to have even more access to available credit products that have lower interest rates and pay less.

For instance, if you have a credit score of 620, you would pay a range of $65,000 to $200,000 for a 30-year mortgage. While a person with a score of above 760 will pay less than that for a shorter period. In the long run, borrowers with a credit score of above 760 have plenty of options including 0% interest credit cards and they qualify for 0% financing on vehicles, as well.

How do You Improve Your Credit Score?

After discovering how a personal loan affects your credit, what next? Well, if the impact is a bad credit score then their several ways you can try to improve your credit score. But, if it had a positive impact on your credit score, there is no harm done, by having a higher score. So, here are some of the ways you can improve your credit score.

Check Your Credit Reports to Make Sure They are Accurate

Sometimes, credit history reports can be notoriously inaccurate. But, it is important to note that this might not be the fault of any of the credit bureaus. Credit bureaus maintain accurate credit records and they report the information they acquire from different lenders. But, the trouble is that, they can sometimes get information from lenders that is not right. This reason may arise if files get mixed up and this eventually causes mistakes during the data entry process.

Checking your credit score by reviewing reports from credit bureaus enables you to check for inaccuracies. Once you have established a mistake has been made, you can then file a dispute. Disputes to credit bureaus are made online and it follows dispute procedures for each bureau. Fixing these mistakes is an excellent way of improving your credit score.

Fix Your Late Payments

Like discussed earlier, one of the ways a personal loan affects your credit is when you miss your payments. To help fix your credit score, you can try disputing all your late loan payments even if they may be accurate. When lenders report late payments, the credit bureaus require them to verify the information they present, and this can sometimes take time.

If the lender fails to respond within the given time, the bureaus will then remove the negative information from your report. But, if this does not help you get rid of your late payments, you can try negotiating with your lender to put your late payment information on your history rather than credit score. If your online lender agrees, they can easily change your payment information with the help of credit bureaus.

To avoid late payments make sure you try paying off all your debts, making big payments if possible, or bringing the account current. Doing this in exchange for the removal and correction of all your late payment information, is an incentive no lender can refuse. Alternatively, you can try to get your lender to accept a particular amount of money and this will have your account show, closed and paid as agreed on your credit history.

Come Up With a Plan to Help Improve Your Score

Nobody constructs a house unless they have a plan. To improve your credit, you also require a plan that will show you just how to improve your score. The first step of your plan should be signing up for a credit tracking system. This will help you know your score. The next step should be cleaning up your credit report. Cleaning up your report requires you to make sure that all the information in your report is accurate.

Once that is done, the next step is reducing spending, coming up with a budget, and dealing with your older debts. For instance, if you are using a credit card to buy things, then you are spending too much. Try using cash only instead, or try carrying one credit card. This will keep you from overspending. Also, when you run out of cash, try to stop spending. This will make it easy for you not to spend money, you do not have.

Also, avoid taking personal loans if you are not sure you have the finances to pay back the loan. If you cannot handle paying back your loan you already have, make sure you do not add even more debt by taking a personal loan.

Types of Personal Loans

There are primarily two main types of personal loans and they are:

Unsecured loans: These are personal loans that do not require any collateral. The lender makes a decision as to whether you qualify for a loan based on your credit and financial history. If you do not qualify for this type of loan or one with lower interest rates, the next option is applying for the second type of loan.

Secured loans: These are personal loans that require collateral like a savings account. In the event that you are unable to pay back the loan, your lender has the right to acquire your assets, as a form of payment for your loan.

However, most of the personal loans available are unsecured and since the lender cannot possess your assets, this why the loan interest rates of personal loans tend to be higher compared to loans that require security.

Difference Between Secured and Unsecured Personal Loans

How a Personal Loan Works

Like any other loan, personal loans are also installment type loans. This means that when you borrow a particular amount of money; you will have to pay that amount back in monthly installments with interest over the loan’s life— and it ranges from at least 12 to 84 months. Once you have finally completed paying the full amount, your account is then closed. Once you complete paying your loan, you can request for another loan, if you require more money.

However, before you take a personal loan, it is important to consider why you require the money and then make an appropriate choice of the type of loan that suits your current financial situation appropriately.

Uses of Personal Loans

One of the most significant advantages of taking a personal loan is that they are extremely flexible. These types of loans can cover anything that is if you have a credit score that inspires lenders to take a chance on you. Everyone has a reason, as to why they borrow money from replacing an appliance, paying for an unexpected emergency, to covering the medical costs and this is just but a few examples.

Whatever your reason may be for taking fast loans, it is important to keep in mind that:

  • You can only borrow money when you know for sure that you will comfortably pay it back in a timely manner.
  • Do not increase your debt for reasons that are not sufficiently important.
  • Taking a consumer loan when you have no source of extra income to pay back over a period of time is a very costly mistake. It is also not an excellent financial strategy to buy gifts, pay for a vacation or other luxuries with the loan you acquired. Even if you can comfortably pay it back within the given schedule.

Instead, you can use the money you are repaying your loan with to try to improve your financial outlook. However, one of the most popular reasons most people take personal loans is to try and reduce their higher-interest debts. This tactic makes it possible for people to not only pay off their debts but also lower the overall interest on their debt.

Once your overall interest is reduced, this ultimately reduces the amount of money you end up paying or the duration it takes to pay off your debt. This makes it easy for you to make single payments every month than constant payments, and this makes managing your debt easier.

Elements of a Personal Loan

The details of fixed loans tend to shift depending on the details of your situation. Some of these changes include the borrower’s credit score and history and the lender’s rate schedule. However, there are several elements that affect any consumer loan, and they are:

Interest Rate

The interest rate of any loan is usually given in percentage form of any personal loan amount you take. It sums up as the amount of money you pay on top of the amount of money you took from a personal loan.

Unlike other loans, the interest rate of personal loans are fixed. This means that the rate of the most stays the same during the entire life of the loan. While other loan options, the interest rate fluctuates, meaning it can change from time to time.

Term Length

This is the amount of term a lender gives a borrower to repay the loan. Unlike other loans, personal loans have a fixed time length and this means that all the payment you pay on a monthly basis, will always be the same. The payment terms for personal loans often range between a few months to six years or sometimes even longer. Although according to a particular study, three years is the time most people end up completing the payments of their personal loans.

Borrowing Maximum/minimum

When it comes to the amount of money you can borrow for a personal loan, most online lenders often have caps and floors. The typical range for a personal loan is $1,000 to $35000. However, some lenders offer amounts higher than this to borrower’s with excellent credit scores. However, according to a study conducted, the highest amount of money given by lenders was $10,575.

Prepayment Penalties

Like any other loan, a personal loan does come with a stipulation of treatment penalties, if you do not repay the loan on time. However, it this penalties also apply to people who repay their loans faster than the stipulated period. So, if you want to repay your consumer loan faster than the stipulated period, it is important to check whether your prepayment agreement has any attached penalties.

Inclusive Fees

Most lenders attach several different types of fees to the personal loans they offer. Some of these fees include service charges and origination fees. An origination fee is the amount of money you have to pay at the very start to have the loan set up for you. These type of fees range between 1% to at least 6% of your original loan amount. When applying for a personal loan always make sure you read the lenders fine print. This is what will help you know the type of fees you are responsible for before signing in the dotted lines.

APR

This is the amount of money you have to pay every year in order to borrow a loan. This fee includes the interest rate as well. In other words, this is the total amount of money you are charged with every year for borrowing q personal loan. The amount of an APR depends on your credit score and it can range between 4% to 132%.

How to Apply for a Personal Loan?

Applying for a consumer loan is a fairly simple process, especially when working with online lenders. Online lenders make it their priority to speed up your application process and avail the money to you within a short time. However, before settling for a particular lender, it is important that you check their terms, as this will make it easier for you to determine their charges and interest rates.

The fact that every online lender has its own loan structures and customized rates means that you have to first shop around for a rate and loan that is convenient before settling for one. Once you are ready to apply, your chosen lender will want to understand your financial situation first. This will help them determine whether to grant you the loan or not.

For this, the online lender will ask you to provide different types of information about your financial state and yourself. Some of the factors they require include:

Your Credit Score and History

When you make an official application— as opposed to a qualification request, the online lender will have to perform a background check and

Credit Score Management
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learn more about your credit history and score. Most online lenders have a specific credit score they require from their applicant in order for them to lend you the money you require.

People with high credit scores are always eligible for higher loan limits with better rate. Individuals with longer credit history also fare well when it comes to getting the best loan limits.

Income and Employment

Your online lender may ask for employment and income information in the form of pay stubs, tax returns, or W-2s. For specific reasons, lenders tend to feel confident lending to people with a steady and solid income.

Your Debt-to-Income Ratio

To determine this ratio, online lenders tend to use a key metric, which helps them predict a person’s ability to pay a loan back. The ratio indicates your debt amount compared to your income. If your ratio is at 50% or lower than that, then you are in a good position to not only acquire a loan but to pay it back, as well.

To ensure that the entire process is thorough, some online lenders may also ask for phone consultation after your first application. Speaking to an applicant is useful; as it helps, you understand the technicalities of your application and repayment process. You also get to have your questions answered.

But, it is important to note that, the amount of time you take to finally get a personal loan varies across institutions. For instance, banks take longer compared to online lenders. Online lenders can sometimes give you an offer within a few days of your application and provide funds, as well.

After learning, everything about personal loans, the next section is discussing how a personal loan affects your credit.

Conclusion

It does not matter how a personal loan affects your credit score, the important thing is that you still have the ability to improve your credit score. And all it takes is:

  • Correcting all the errors that appear on your credit report
  • Fixing all the delinquent accounts you have by trying to pay them off, as this will help the lender get rid of any negative information on your credit file.
  • Pay down all your debts, as this will help improve your payment ratio.

Do not let a personal loan affect your credit in a negative way, you have the power to improve your score.