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.

The 5 Top Personal Loans For Fair Credit

A man and a women hands hold a money bags

So, you are thinking about a personal loan. All you know at this point is you need the money and you need it sooner rather than later. It may help you to know that you are not the first person to find yourself in this position. We all have moments where we need money quickly. Often times, we just have no idea what to do next. You do not know where to get a loan. You do not know if you can afford a loan. And you do not even know if you can qualify for a loan. Believe me, I understand the stress that needing money causes, as well as the anxiety of not knowing if you can qualify for a loan. While you practice taking deep breaths, continue reading to find out more about personal loans for fair credit.

Personal Loans for Fair Credit

Thinking about a personal loan can be scary. I am a firm believer in knowledge being power. The more you know about personal loans, the less scary they become. You also put yourself in a position to make the best decision. You cannot possibly make a good decision when you do not have all of the information. That being said, let’s talk about the basic for a bit.

Personal loans for fair credit are similar to those for good credit. You have an option to choose if you will get a personal loan online or go into a bank. A personal loan is a set amount of money that you borrow from a lender while making a promise to repay it. You are promising to repay the amount you borrowed, which is called the principal, plus interest. Interest is what the lender adds on to the loan as a fee for letting you borrow the money. The amount of interest you pay depends on your credit.

This is where you begin to see differences between fair credit and good credit. More on that in a little bit. Loans can be secured or unsecured, although most personal loans are unsecured. The terms of the loan can differ from lender to lender, but typically you are going to make monthly payments until the loan is paid.

One of the most important things to do when getting a personal loan is finding a good lender. Loanry can help you with that. This entire blog is devoted to reviewing lenders and their offers, and after you’re done reading, you’ll be ready to choose the best lender for your situation.

What Is Considered Fair Credit?

You probably know by now that your credit score is the largest driver in you getting loans, mortgages, cars, insurance and sometimes jobs. It is important to understand your credit score and what that means for you to obtain a loan. Before you start researching loan places, you should find out your credit score.

If you have a credit score between 620 and 659, you are considered to have fair credit. Some lenders also use the term average to describe this credit score. You are not alone. A little more than 10 percent of people have fair credit. A typical person with fair credit is in their early 40s and makes about $54,000 a year. Does that sound like you? Are you wondering what that means when you want personal loans for fair credit?

The bottom line of what this means for you is higher interest. You are going to pay higher interest on loans and credit cards than someone with good or great credit. The other side to that is you are going to pay lower interest than someone with bad or no credit. You are looking at an interest rate around 22 percent on a credit card and potentially in the 20 percent range for a personal loan, also. You are not in the worst place, but not in the best, either. Good news, you have room for improvement and it can happen.

Loan #1 For Fair Credit – Avant

Avent LoansNow that you are in the know, it is time to find personal loans for fair credit. The best way to do this is to do some loan shopping. There are many different lenders available. The key is to pick the right one for you. The right one is the one that meets your needs and gives you a loan that you can afford. There are traditional banks and online lenders available to you. There are also short term loan lenders that can provide loans. Each one of them has positives and negatives. As I mentioned earlier, it is about knowing all the information and making the best choice.

One of the best choices for personal loans for fair credit is Avant. They are willing to provide loans to those with credit scores as low as 580. Also, they have no specific income requirements, so if you have low income, it will not stand in your way of getting a loan from Avant. They have additional loan requirements that tend to be more flexible than most. They provide loans with a huge range of amounts from $2,000 up to $35,000. Also, they provide loan terms in two, three, four, or five year increments. They do have an origination fee that can be up to 4.75 percent of the loan amount. They offer APRs that range from 9.95 percent all the way up to 35.99 percent.

Loan #2 For Fair Credit – Lending Club

Lendingclub loansThe next lender on the list of potential personal loans for fair credit is a bit different from your average lender. Lending Club is a peer to peer lending facility. What that means is that they borrow the money from individual people to be able to offer loans. They are a great debt consolidation option because they may offer the option to pay your other creditors directly. This eliminates the need for you to do it. Their loans vary in amount from $1,000 up to $40,000. They have loan terms of three or five years in which you can pay back your loan.

You should be aware that Lending Club has a hefty origination fee. It is anywhere between 1 to 6 percent of your loan amount. Lending Club offers interest rates from 6.95 percent to 35.89 percent. They do require you to have a credit score of at least 600. They do not have any set income requirements, so a low income should not stand in your way. But they do have some other requirements of which you should be aware. They want you to have a credit history of at least three years. They also want your debt to income ratio to be under 40 percent.

Loan #3 For Fair Credit – Upstart

Upstart LoansNext on the list of lenders of personal loans for fair credit is Upstart. This is a great lender for someone who does not have a long credit history but is on track to continue to increase income. They are willing to loan money to those who have a credit score of 580 or higher. They do want their borrowers to have an income of at least $12,000 per year. And they allow you to borrow anywhere from $1,000 to $50,000 with loan terms of three and five years. Pay attention to how much money that takes off the bottom line for you. They do have a heavy origination fee of anywhere from 1 to 6 percent of your loan amount.  They are looking for their borrowers to have a debt to income ratio of less than 45 percent.

Loan #4 For Fair Credit – Freedom Plus

Freedomplus logoWhen looking for personal loans for fair credit, you should make sure that Freedom Plus is on your list of potential lenders. They want you to have a minimum credit score of 640. This lender is also a great choice for debt consolidation because they will pay money directly to your other debtors for you. You do not have to worry about making any of those final payments. Their minimum loan amount is $7,500, but they go as high as $40,000. They want their borrowers to have an annual income of at least $40,000. They are also looking for a debt to income ratio of less than 40 percent. Their average borrower has a debt to income ratio of 20 percent. The term length of their loans is anywhere from 2 to 5 years.

For some loans, they do not charge an origination fee, but it can go up to 5 percent of the loan amount. Their interest rates fall between 5.99 percent to 29.99 percent.

Loan #5 For Fair Credit – Upgrade

Upgrade logoLast, but certainly not least on the list of lenders for personal loans for fair credit is Upgrade. They are willing to loan to lenders that need to build up their credit history. They provide credit health tools and hardship plans. Their interest rates range from 6.98 percent to 35.89 percent. They are a good lender for debt consolidation because they will pay your debtors directly. They want you to have a credit score of at least 600.

You may be able to qualify for a lower rate if you sign up for their automatic payment option. They do not have an income requirement, but their borrowers have average earnings of $30,000 per year. The terms of their loans range from 3 to 5 years. They do want their borrowers to have at least $800 cash flow per month. They are looking for a maximum debt to income ratio of 60 percent. Their origination fee ranges from 1.5 percent to 6 percent. They offer loan amounts anywhere from $1,000 to $50,000. A point of awareness for you is that Upgrade is not available to those living in Iowa, Maryland, Vermont or West Virginia.

How Can I Use A Personal Loan?

When it comes to personal loans for fair credit, you can use them for whatever needs you have. There are some smart ways to use a personal loan. You may be in a position where you need the money for an emergency expense, such as a medical bill or a house repair. In those cases, using the money for those needs is a smart way to make use of a personal loan. There are some other ways to use the money from a personal loan that may help you improve your financial outlook.

Pay off Your Debt with Personal Loan

If you have a large amount of debt at high-interest rates, it may be a good idea for you to use a personal loan to consolidate your debt. You pay off all of the high-interest debts, like credit cards and pay just one monthly amount to one lender until that debt is paid.  This is when you determine how much money you owe all of your debtors and you take out a personal loan for that amount.  You must be cautious when you do this because you still have the same amount of debt, you have just consolidated it into one. You have to be mindful of how you spend money and not get yourself into a position where you have a large amount of debt again.

Use a Personal Loan to Make More Money

You may also want to consider using a personal loan to make more money. Before start making more money, it is very important to be familiar with how personal loans work. If you have a business or some other way to make money, you could take out a loan to invest in that endeavor. For example, you have a business baking cakes but you need another oven and expensive equipment so you can make more than one cake at a time. You take out a personal loan to invest in the equipment and the money you make from a greater production can go towards paying off the personal loan. If you can, make double payments so that you can pay off the loan faster.

Can I Improve My Fair Credit?

The good news about fair credit is you are able to fix it. It is going to take a little bit of time and consistent work, but it is possible. Before you look for personal loans for fair credit, you may want to take some steps to improve your credit score first. One of the first steps you want to take is to pull your credit report and look at it. Do not bury your head in the sand and pretend it is not there. Request it and look at it. Look for any errors that are contained and dispute them. If there is something wrong with your credit report, you must address it immediately. That alone can help your credit score improve.

Steps to Take Before Taking Out a Personal Loan

Begin paying all of your bills on time. Making late or missing payments is the fastest way to lower your credit score. One of the best ways to begin to improve it is by making payments on time. When it comes to credit cards, make sure you make at least the minimum payment each month. You should pay off your credit cards each month, but I realize that may not be possible. When you cannot do that, pay as much as you can, but at least the minimum amount. You should pay off the highest interest debts first to prevent a large amount of interest from continuing to grow.

You should also work to reduce the amount of credit you utilize. Lenders prefer that you stay under 30 percent utilization. That means if the credit that is available to you, you are only using 30 percent of it. To highlight this, I will give you an example with numbers. If you have a credit card with $10,000 available credit, 30 percent of that is $3,000. That means that at any given time, you should not have a balance of more than $3,000.

Conclusion

Hopefully, with all the information I provided on personal loans for fair credit, you are feeling a little better about your options. You have some solid information on which to consider your choices. I have listed some good options for you to consider when thinking about a loan. Two things I did not mention that I think are important to understand: the reason why you are getting a loan and if you can afford it. There are lots of reasons why you might want a personal loan. You should understand your reason and make sure it makes good financial sense.

Sure, we would all love to have a bigger television and upgraded furniture, but do you really need it? Is that the best reason to take out a personal loan? Maybe, for you, it is. Only you can make that decision. Just make sure it is a sound one. My second point was to make sure you can afford it. Remember, a personal loan is not a gift. You must make payments every month until it is paid off. Make sure you can make those payments. Look at your budget and determine what you can afford to pay each month and stay in that range. If you go over it, you may end up regretting it when you do not have the money to pay. Remember, make good choices when it comes to your finances. You will be glad you did.

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Manufacturing Loans to Keep You In High Gear

When you hear the term “manufacturing” or think about businesses built around manufacturing, the first images which pop into your mind are probably of huge factories, massive assembly lines, multi-million-dollar automation, and some unfathomable quantity of products output each and every day. And, to be fair, there are still important manufacturers operating on that scale both in the United States and beyond.

Manufacturing and Small Business Ownership

But not all manufacturing is done on such a massive scale. As you drive past industrial parks or wonder what exactly goes on inside those giant metal buildings alongside the highway as you’re heading to Grandma’s for the holidays, you may be looking at the backbone of American manufacturing. These are small businesses whose primary function is creation of tangible items. They’re often locally owned. Most have closer to a dozen employees than a hundred. And they tend to be fiercely devoted to doing right by those on their payroll.

This sort of manufacturing requires substantial investment of time and money. Not to mention absolute dedication on the part of management and ownership. At the same time, it operates in an economy with no guarantees from one season to the next just how things are going to go that year. They may have a company truck or two, but they probably don’t have private jets. And they certainly don’t have corporate offices around the world. It’s a good bet the boss knows how to fill almost any role anywhere in the building. And has – often on short notice.

It’s also very likely they rely on manufacturing loans periodically to get through the rough spots.

I knew a family in Oklahoma who were millionaires several times over. The husband had innovated some sort of labeling machinery. They ended up slapping ingredient lists and bar codes on baked goods for a national grocery chain. And still they couldn’t keep up with the windfall. I never fully understood it, but it never ceased being amusing hearing the wife express her bewilderment at how suddenly things had turned around.

Why Would Manufacturers Need A Loan?

Most small businesses encounter numerous situations in which the right financing can be the difference between long-term prosperity and becoming another tragic entrepreneurial statistic. Manufacturing loans help owners deal with common small business challenges, as well as some unique to their situation. Here are a few of the most common reasons even a successful manufacturer might want to loan shop.

1. Starting a New Business

This one is a bit of a no-brainer. Obviously, it would be nice to think that the average entrepreneur (if there is such a thing) could simply save up twenty thousand dollars or so (or five times that, or ten times that), then buy themselves a manufacturing facility and hire a dozen or so reliable workers. Easy peasy, right?

But it doesn’t usually work that way. Most of the time, starting a small business that requires a major investment in facilities or equipment means securing a start-up loan of some sort. This requires some serious preparation. Lenders will want to know about your personal credit history and current credit rating, but also about just what it is you think you’re going to do with all this money that will allow you to pay them back consistently.

There’s not necessarily a major distinction between a small business start-up loan and a personal loan. It depends on your credit history and the nature of the business you’re wishing to establish. While manufacturing options usually require major funding, other sorts of small businesses may allow you to gradually build. Perhaps starting part-time or working out of your home until things start to take off. If the business loans you consider don’t look right for you, consider some of the flexibility of personal loans online instead. They might end up being just what you need.

Personal loans often require less paperwork, and with a decent credit history may secure you a lower interest rate. They are at the very least worth considering if you’re looking to start your own business.

Where to Look

If you’re considering applying for start-up financing, start by exploring the variety of loan places available in the 21st century. Visit several local banks and credit unions and talk to representatives there about your options. Then, consider reputable online lenders, many of whom specialize in unusual circumstances or personal loans with less-than-perfect credit. Because we realize that it can be a bit daunting to navigate the options on your own, connecting you with legit lenders willing to explore options with you is a central feature of what we do. We’ll never charge you for making a few introductions, and we don’t loan money ourselves or have a stake in whether you decide to borrow the money or not. We just want to make sure you have valid options.

You’ll want to check your own credit report to make sure there are no errors or surprises. You should also prepare a business plan, including at least a general breakdown of start-up costs, what you expect in the first 3-5 years, and at what point you believe it’s realistic to begin showing a consistent profit. It’s nice if you can produce recent market analysis related to whatever it is you’re going to produce, along with whatever personal research you’ve done on conditions in your area.

You should also be prepared with personal tax returns, any tax returns from previous businesses, and anything else that shows you know what you’re doing and aren’t just stepping out on a wing and a prayer. Becoming an entrepreneur certainly requires risk, and an abundance of self-confidence, and sometimes even defying the statistics, but those things are on you. Your lender wants to see evidence that you’re very likely to be both willing and able to repay manufacturing loans or any other sort of small business loan or personal loan you may be pursuing.

2. Equipment Loans

Manufacturing is an inherently equipment-heavy type of business. Machinery requires maintenance. And very likely, you must upgrade or replace it from time to time in order to stay competitive. In the same way any small business must have a reliable network of phones, computers, and related communication, manufacturers have to be able to manufacture high quality products with reliable equipment.

The best equipment loan can help spread out the cost of this sort of investment over a manageable time frame. Depending on the nature of the business, the equipment itself might serve as collateral, making it easier to secure the loan on favorable terms – especially a reasonable interest rate. On the other hand, failure to keep up with payments could lead to the lender repossessing the equipment so purchased. They don’t want it, you understand – they’re not in the manufacturing business. They’d rather be repaid. But it can and does happen, so be realistic going in when considering these sorts of manufacturing loans.

3. Invoice Financing

Most manufacturers sell in bulk to clients who then use or resell the items being made according to their own business models and schedules. This can mean large volumes of product going out the door in exchange for… invoices. Payment schedules. Promises, essentially.

That’s not always a bad thing. When times are good, it may all balance out as payments roll in throughout the year. But for smaller scale manufacturing, there are often periods of famine offsetting weeks of feast, while most monthly obligations remain the same. Employees need to be paid whether money is coming in or not. The electric bill has to be paid, and insurance kept current. It can be challenging for the small business owner to juggle the available resources.

Invoice financing – sometimes called accounts receivable financing – is a special type of loan in which the lender essentially purchases your outstanding invoices. They provide a percentage of what you’re due up front (usually 80% – 90%) and receive their payment when the invoices are resolved.

On the one hand, you’re essentially paying a third party for faster payment on money they owe you anyway. Without careful negotiation of fees and percentages, this is the sort of thing which could quickly cut into essential profits. You don’t want to get in the habit of running your business through a repeated series of payday loans!

On the other, paying for flexibility and faster access to funding is what most small business loans are about in one form or another. Cautious use of invoice financing can help your company stay nimble and keep your employees happy – not to mention keeping the lights on!

4. Revolving Credit

This is one of the most flexible forms of loan available to small businesses, including those used as manufacturing loans. In some ways, it operates like a business credit card. You apply for a “line of credit”. A theoretical loan amount you don’t have to actually borrow at the time of application. Working with the lender, you agree on a maximum loan amount, interest rate, and other terms. At this point you now have an amount of money available to you. You can access it when you need it and pay back according to the pre-arranged agreement.

The nice thing is that you don’t have to take out the full amount up front, unnecessarily raising your monthly repayment or costing yourself interest on money you don’t need right at the moment. You can use the funds as necessary and only pay back what you’ve taken out. At the same time, the full amount is available quickly and without additional fuss, making access extremely convenient and flexible for you. In manufacturing, that can make all the difference.

5. Seasonal Financing

If you’re in the business of manufacturing something that sells seven times more in the spring and summer than it does during colder seasons, it may be helpful to secure seasonal financing to get you through those winter months. This is particularly appropriate if you know with some confidence that sales and profits will be there at a certain point based on past seasons – in other words, if you have a track record.

Of course it’s ideal if you’re able to budget for this sort of seasonal come-and-go without turning to outside lenders. But margins in small business manufacturing can be rather small. And sometimes even a successful business simply doesn’t run the sort of excess profits which allow them to juggle this entirely in-house. Seasonal loans can help balance out the year (like you may already do on your home heating or air conditioning bill) so that you can keep things running smoothly, whatever the time of year.

6. Expansion

The only thing more exciting and terrifying that deciding to expand your business is deciding to start it in the first place! Perhaps things have been going pretty well. You’re growing and more and more often having to scramble to keep up with demand. There’s this great location on the other side of town. It would give you access to an entirely new range of customers. And allow you to specialize some of your production. Tempting, right?

Or, you learn that a competitor is struggling and perhaps looking for a way out. And you wouldn’t mind taking over their facilities and possibly even keeping some of their employees. Nothing wrong with a little competition. But it’s always nice when you’re doing such a better job of things that you’re able to absorb that competition and grow substantially.

Growth takes money. It’s a huge risk that carries the potential for huge reward. Much like a start-up loan, you’ll want to prepare a relatively detailed business plan, profit statements, and all the other relevant goodies before talking to lenders about this one. Still, if you’ve shown yourself to be a reliable business client for a few years already, you’re going in with a strong track record and you’re already established as a legit player. Don’t be afraid to negotiate or shop around a bit. That’s what your customers do, isn’t it?

Who Makes The Decision?

It’s never an easy call, deciding whether to take advantage of the many types of manufacturing loans out there. What that process looks like may depend largely on how you’ve chosen to structure your business. In other words, it may not be entirely up to you. What are some of the most common structures which might influence the decision-making process?

Sole Proprietorship

This is the most common structure for a beginning business, and one of the easiest to establish. Often, when we think of sole proprietors, we think of entrepreneurs who essentially work “freelance.” If you consult, train, entertain, write, proofread, or otherwise do work for which you expect to be paid, but are not actually employed by that person or company, you’re a sole proprietor.

The advantages are obvious. You make all of your own decisions. All profits are yours to do with as you see fit. You work the hours you choose and take the gigs you want while turning down any you don’t. If you thrive on independence and have plenty of personal drive, this may be the perfect set-up for you.

On the other hand, sole proprietors are responsible for paying their own employment taxes, which can be substantial. The money your employer would normally deduct from your check before you ever see it isn’t deducted from payments to sole proprietors. And without careful planning you can end up owing more than you can easily pay come tax time. There are no benefits, no health insurance, no provisions for sick days or unexpected life events which prevent the fulfillment of whatever agreement has been made. There’s also no guarantee of work. If there are no gigs, there are no gigs.

If you’re considering manufacturing loans, or any other sort of personal or business loans, and you’re a sole proprietor, the decision is entirely in your hands – as is the responsibility for how things turn out.

Partnership

There are different ways to structure a partnership, and no specific number of partners required. A partnership can be two equal partners. Or one partner who has primary decision-making power. But also takes on most of the liability should things go south, or any number of combinations. Clear, detailed partnership agreements are important when structuring your business in this way. Even if the people involved are family or friends.

Actually, maybe especially if the people involved are family or friends.

Who makes the final decision on manufacturing loans or any other fiscal options depends on how the partnership is set up. But there’s certainly some advantage to having other vested parties at the table to discuss and consider the possibilities. The strongest business relationships tend to be those in which all parties are equally committed and share a common vision, but aren’t afraid to question or debate important decisions along the way.

Iron sharpens iron and all that, as they say.

LLC – The Limited Liability Company

This is a structure which combines the benefits of incorporation with some of the tax advantages of being a sole proprietorship or partnership. The individuals running the company are protected from personal liability in the case of bankruptcy, lawsuits, or other unforeseen disasters. You’re not going to lose your home or car if the business fails, in other words. In terms of manufacturing loans or other major money decisions, this provides some protection for ownership. But it doesn’t absolve you of the personal responsibility to do everything possible to repay your debts in a timely and complete manner.

Corporations

Corporations (sometimes called “C-Corps”) are, legally speaking, entirely separate from their owners. They profit as legal entities, pay taxes as legal entities, may sue or be sued as legal entities. That means that the major advantage of a corporation is the separation between the individuals running the company and the concept of the company itself. Corporations tend to be larger businesses consisting of specialized departments.

Exactly who’s responsible for taking out manufacturing loans or other major financial decisions depends on the structure of the corporation. In some organizations, an individual has a task to make that call. In others, there’s a board or committee which would discuss the pros and cons before moving ahead.

Generally, if we’re talking about small business manufacturing, though, we’re not talking about these sorts of structures. Still, it’s good to be aware of them before venturing into even the earliest stages of starting your own business.

Where To Look For Manufacturing Loans

As mentioned before, don’t limit your options when considering manufacturing loans or other sorts of financing for your small business. Meet with local banks and credit unions. Fill out paperwork with your local Small Business Association (SBA). If Uncle Arthur is serious about loaning you the money himself in exchange for a percentage of the business, why not grab a beer and have that conversation as well?

But before you commit, keep in mind that this is the 21st century and financing has evolved dramatically. The internet is a weird, wonderful place. And whatever else it’s done, it’s allowed for an explosion of nimble, creative financial organizations to tailor their offers and benefits to circumstances just like yours.

You don’t want to go in cold and randomly hope for the best, of course. That’s where we come in. We do quite a few things here at Loanry and our associated sites. But one of the most foundational is our ability to connect you with legitimate lenders likely to make competitive offers for your business. We don’t charge you anything and don’t want to sell you anything. We don’t even have a page for water bottles or t-shirts or whatever.

Our success model comes from helping you organize and improve the efficiency of your finances, your investments, your borrowing, your savings, and the like. We’ll take some basic information about who you are and what you’re looking for, then hook you up with a lender or lenders we think are most likely to meet your needs. After that, it’s up to you. If you like what they’re offering, you are at that point doing business with them. If you don’t, well… we’ll help you keep exploring. Or considering. Or educating yourself on the options.

It’s a little idealistic, to be sure – but it works and we can all sleep at night knowing that it does.

Closing Thoughts

Keep in mind that with any loan, your name and your credit are on the line. They dramatically influence what sort of rates and terms you can get. And they are in turn shaped by how reliably you pay back your obligations.

A bussines owner can use manufacturing loans for many productive purposes, as we’ve already discussed. What you should NOT use them for i delaying the inevitable, or denying the obvious. Don’t go into debt trying to throw good money after bad. Or trying to avoid confronting major financial problems in your business or personal accounts. There are solutions for hard times. Denial isn’t one of them.

That said, all entrepreneurship involves risk, and dreaming, and a certain amount of charging madly into the future. When you’re ready, we’ve got your back.

Personal Loan Cost: Breaking Down Interest Rates with an Example

Sometimes in life, you just need a little extra money. When you do not have time to earn it with a job, you might turn to your credit cards. If that does not cover it, you take out a personal loan.

But, wait. A personal loan? Aren’t those tough to get?

Yes and no.

It can be hard to qualify for a personal loan if you have little to no credit. It also makes it tough if you have bad credit.

That does not mean that you cannot qualify for a loan. It does mean that you will need to look a little harder and apply for a few more loans than someone with excellent credit.

Even those with bad credit can obtain a loan. Okay, not a prime loan, but a loan.

What does it mean for a loan to be prime?

Prime refers to the interest rate of the loan. A prime interest rate refers to the lower, very desirable interest rates.

These interest rates go to prime borrowers. The term prime borrower refers an individual with excellent or very good credit. Their credit score is in the high 700s or low to mid 800s.

Individuals with scores beneath that level receive sub-prime interest rates.

The term sub-prime interest rates refers to the higher interest rates that go to individuals with good, fair and poor credit. Those individuals typically have a credit score of 719 or less.

Determining Personal Loan Cost

Typically, the average annual percentage rate ranges between 10 and 28 percent. These rates change each year. The above rates are for 2019. In some years, they drop as low as five percent. On the other hand, some years they rise all the way to 36 percent.

Other stuff goes into which interest rate you get. It is more than how creditworthy you are. Your credit score does mean a lot, but these other items also go into the formula used to determine your interest rate:

  • the length of the loan,
  • how much money you are asking for,
  • the lending institution.

The greater the amount of money you need, the higher your APR will be. The same is true of requesting a long loan term. That translates to higher risk for the bank because more people typically default on larger loans and those that take a long period of time to repay.

Typical Loan Interest Rates

With really terrific credit and the right loan length plus loan amount, you could currently land a rate as low as 2.9 percent from Backed. You can do almost as well with LightStream which offers a 3.99 percent interest rate when you set up auto pay for your monthly payments. Those rates aren’t typical. You should not expect to land a rate like that. Personal loan cost varies widely.

EXAMPLES

If you have really great credit and the stars are in alignment, you can score an interest rate of 5.99 percent or 6.99 percent. Best Egg, FreedomPlus, Marcus, Payoff, Peerform, PersonalLoans.com, PNC Bank and Upgrade all offer the 5.99 percent interest rate to their best applicants. The 6.99 percent rate you’ll find at Discover Personal Loans, Earnest, Santander Bank and TD Bank.

While many banks and credit unions offer competitive interest rates, you will typically receive the lowest interest rates at online lenders. Online lenders also typically prove more amenable to applicants with lower credit scores. Some will loan to people with scores as low as 580 though the personal loan cost will be higher.

Apply to credit unions that offer alternative lending programs. These typically offer low interest rates to individuals with poor credit scores. As I mentioned in a previous article, these credit unions leverage their not-for-profit status to charge lower interest rates than banks. Next to online lenders, credit unions are the most likely institution to loan you money.

You can put it all on a credit card, if you happen to have an amazing credit score. This could land you a zero percent balance transfer credit card. So long as you can make the payments, you can save money on the interest while the introductory rate remains good.

The Importance of Your Credit Score

I cannot overemphasize how vital your healthy credit score is to you obtaining a good interest rate. While a great score can get you an interest rate in the low, single digits, people with those awesome scores are pretty rare. Most people have fair to poor credit. That’s because as a country, the US has become addicted to credit cards. Our habits, like our blue jeans, have traveled to other countries and now, people the world over struggle with credit burdens.

Since most people have fair to poor credit, they will qualify for the higher interest rate loans. Typically, the interest rates they get fall between 18 percent to 36 percent.

Some lending institutions will turn down applicants with no credit history or a credit score of less than 580 for a conventional personal loan. If this happens, turn to a local credit union or a nonprofit financial assistance organization. Skip the loan sharks and the payday loans. The APR for both borders on ridiculous. Avoid accepting a loan with an interest rate that you cannot afford to pay back.

Personal Loan Cost: Interest Rates by Credit Score
Credit Description Credit Score Interest Rate Range
Excellent 720 – 850 10.3 – 12.5%
Good 680 – 719 13.5 – 15.5%
Average/Fair 640 – 679 17.8 – 19.9%
Poor 300 – 639 28.5 – 32.0%

Personal Loan Costs: Determining What You Can Afford

The smart way to apply for personal loans is to know exactly what you can afford first. That means developing a budget, if you do not already have one and sticking to it. Your budget lets you see what you have on a monthly basis to repay the loan. It has to be enough to cover both the interest payments and the principal every month, ideally with a small cushion. The great thing is that you can actually raise your credit score by taking out the personal loan you need, then repaying it in a timely fashion.

When you apply for personal loans, you have to know how the interest rates affect the amount you pay back overall and on a monthly basis. If you apply and only receive interest rates that are too high for you to make the payments, you need to consider other options. You may have to wait to take out a loan or you may need to acquire it from a private source.

How Do You Know How Much Loan You Can Afford?

Since it is to banks’ and credit unions’ advantage when you repay your loan on time, they provide free tools to help you plan for taking out a loan. These include loan calculators. These vary in complexity and detail. While you might begin your planning phase of your loan search with an easy to use calculator that uses basic information, it is to your advantage to then move on to the complex, more detailed calculator after the fact.

Personal Loan Calculator – Easy to Use

BankRate’s APR Calculator: You need only three simple numbers for this calculator. You can quickly broad brush a few loan scenarios.

Personal Loan Calculator – Complex

Finder’s Personal Loan Cost Calculator: Finder’s much more complex calculator requires between seven and 10 inputs, but it provides you very exact information that lets you build an accurate picture of what you can afford. After using it, you will know what interest rates and loan terms you can accept and still expect to pay them off on time. Taking out too large a loan places you in jeopardy of not being able to repay it.

Lower Your Personal Loan Cost

You can increase your likelihood of loan acceptance and obtain a better interest rate with a few techniques. Some involve your loan search while others involve agreements with the financial lender.

  • Use a co-signer. Backed offers extremely affordable personal loan interest rates, but it requires the borrowers to use a co-signer to qualify for them.
  • Use comparison shopping tools to ease your loan search.
  • Take a second job or side gig. Use the pay stubs from the job to enhance your loan application.
  • Pay down your credit cards while you search for your loan. The less credit you have out, the more likely you are to obtain a favorable set of loan terms.

I talk as if your loan search will take some time. It probably will. Only the tiny percentage of people with exemplary credit can typically qualify for the loan they need on the first try. You should expect to shop around for a loan for at least a few weeks. That includes your creation of a budget, research into interest rates you can afford, the actual loan applications and the loan approval process.

Sure, there are online loans you can obtain and they advertise they will deposit the loan amount directly into your bank account within 24 hours. Some say 48 hours. Those loans prove some of the most costly. They have extremely high interest rates.

Your goal should be to obtain a personal loan that costs a reasonable amount with a loan term that makes it comfortable for you to pay back. Certainly, if you have to have the money, you may have to take what you can get, but you should make the concerted effort to obtain a conventional loan first.

Meeting with a Loan Officer to Reduce Personal Loan Cost

If you have made your loan applications and the interest rates your potential financial lenders provided turn out to be more than you can afford, you still have some more options to reduce your personal loan cost.

Ask for a meeting with a loan officer. During this meeting, the officer will consider your employment status, history and proof of income. They will also consider the employment type: full-time, part-time or self-employment. You will need to submit proof of these income streams in the form of pay stubs or W2s. Typically, they want to see at least six months. You will also need to provide your last tax return.

Some lenders require a minimum household annual income. If you do not meet this criteria, there is no reason to apply. It will only hurt your credit score by creating a hard hit to your credit report, officially referred to as a “credit inquiry.” Depending on the lender, the minimum ranges between $20,000 to $40,000. While credit card applications often take your word for it or reference your credit report, the same is not true of financial lenders for personal loans. Meeting the income minimum does not lower your personal loan cost. It just means you can apply for the loan. You will need to submit proof of your annual income to the lender.

Reducing Personal Loan Cost: Finding the Best Rates

You can use websites called loan malls to make finding viable lenders easier. Two of these are Loanry.com and Cashry.com. Neither site makes loans. Neither site is a financial lender. Both sites simply work like a shopping mall for loans, helping you find personal loans online easily.

Each site lists lenders that make personal loans. Loanry essentially may connect you with lenders that offer more traditional, conventional loans. Cashry focuses  more closely on lenders which make cash loans with a quick turnaround. Which site you use depends upon the type of loan you need.

Loanry works better for finding loans in larger amounts. Cashry specializes in small cash loans and fast loans. Both are effective for personal loan shopping.

At both, you will complete a short, succinct form that requests very basic financial and identity information. This creates a soft inquiry to your credit report. It does not “ding” your credit, so there is no effect on your score. We also partnered with Fiona to make sure we connect you only to reputable lenders.

And now what?

From this information, the company searches the lenders in its database for those that match your needs. These lenders offer you the closest match to your needs. If you meet the lenders requirements you may get the loan you need. While Loanry and Cashry do not make loans and they do not promise you will get a loan from a lender at their mall, they can make the loan shopping process much easier.

It not only saves you time to use these loan malls, it saves your credit score. The soft inquiry that the loan mall makes does not appear on your credit report nor does it affect your score. It does draw enough information to determine which lenders would be most likely to extend a loan to you.

Using these items to find potential lenders can help reduce personal loan cost. It makes sense to use every Internet tool available and all the credit score enhancing techniques possible to reduce your personal loan cost. Why pay more? It makes no sense. As with anything in life, common sense tells you to look around and find the best deal. This is especially true for finding a personal loan.

What Goes Into Your Credit Score?

Credit score basicsYour credit score and your monthly income comprise the two largest contributing factors to whether and which loan you obtain. While financial institutions examine a number of data points when deciding whether to loan you money, your credit score carries the most weight.

So, what goes into those three little digits that make or break your ability to take out a loan?

The credit reporting agencies look at your credit history, typically going back seven years, your employment status, your income, your extended credit, the number of credit inquires to your account, your payments schedules and whether or not you paid on time. All of that feeds into a formula that spits out a three digit number that defines you as a person to every financial institution.

You aren’t a nice, hardworking individual with three kids and a mortgage. You are 785. To them, that says you do pretty well paying your bills on time. You probably are not late with your payments. And, you might not have made the 800s because you and your spouse took out quite a few credit cards and maxed a few, maybe most, out. You always make the payments though even if you only make the minimums. The bank looks at the credit score, your employment and your debt-to-income ratio.

There’s a classic rock song by Bob Seger that says, “I’m not a number.” Ah, but you are to the banks. You are 785 or you are 665 or 540. Those three digits say so much to the loan officer who sees them. They know what goes into the formula calculations, so they know what is up when they see the number.

They also know that the credit reporting agencies update the number every month. Every month, each credit card or financial institution with whom you have a loan reports to them if you made your payment, how much you paid and when you paid it. They know if you are late by even a day. They are kind of like Santa Claus or God in that sense.

Improve Your Credit Score Fast

7 tips to increase your credit score

That is the bad news and the good news. Just as the bank knows that your credit score reflects an accurate and timely picture of your finances, you can alter the score quickly with a few steps.

Do Not Be Late with Your Payments

First, make your payments on time. Seriously, that’s it. Poof. Your score goes up. Every month you do this, your score goes up. In six months of this, you can increase your credit score by 30 to 50 points.

Check Your Credit Report Regularly

Second, check your credit report. The score plugs into bank formulas for easy calculation. The financial institution also gets a lengthy report that shows exactly which lenders have extended you money and how much and when you paid late or on time.

You can get this same report for free. You read it very carefully and make sure that all the information on it is absolutely correct. Anything that looks hinky or incorrect, you report to the agency. This requires filling out a rather lengthy form online, signing it in blood and providing proof you are really you. I am kidding about the blood. It does take a while to complete, but it is worth it because once you report the inaccuracy the agency investigates. If the information is genuinely wrong, the agency removes it from your report. That typically increases your score.

What kind of things should you question? Definitely any accounts you see that you do not recognize. Yes. This actually happens. Identity theft occurs frequently. You should check your score at least every six months to ensure that your report remains accurate.

Also, check your payment history on each credit card. You might see a report of a late payment that you can prove was made on time. A few years ago, one of the major credit card banks got into major trouble because it was reporting consumers as late because they made a telephone or online payment after 5 pm in the time zone of the main office of the bank. This did not go over well with the government and that bank has since paid reparations of late fees it charged its customers who did, indeed, make their payments on the day they were due. The way the bank was caught was consumers like you reporting to credit reporting agencies the incorrect information which threw up a red flag.

Consolidate

Third, consolidate those accounts. You can pay them off much more quickly if you consolidate using either a consolidation loan or a non-profit agency that offers bundling of your credit accounts in exchange for making the payments through them.

Dave Ramsey quote

Explaining the Debt-to-Income (DTI) Ratio

Your debt-to-income (DTI) ratio also contributes to your personal loan cost. Financial lenders use this to evaluate applicants. The DTI ratio refers to the amount of debt you carry compared to your pre-tax monthly income. This includes all debt, so your house payment or rent counts. Lenders like individuals with a DTI of less than 45 percent. That lets them know that you have plenty of disposable income.

Let’s say you have a monthly pre-tax income of $4,000. Housing, plus your other loans and credit cards comprise a monthly total debt payment of $1,200. Divide your debt payment by your pre-tax income to get your DTI.

1200.00/4000.00 = .30 or 30 percent

Final Thoughts

Whatever the reason you need the loan, whether it is an emergency medical procedure, a vehicle purchase, your wedding or something else entirely, bringing down your personal loan cost makes good financial sense. With a little work, you can obtain the funds you need at a loan term and interest rate you can easily repay. Start by creating your budget, then conducting research on interest rates you can afford. Finally, use Cashry or Loanry to find potential lenders, then apply. You might need to request a meeting with a local loan officer, but this can help you get a better interest rate and that, ultimately, creates a more amenable personal loan cost.

 

How Can a Personal Loan Save You Money?

Most people have some kind of debt and the majority of people have a lot of debt. Getting a personal loan to save money can be the answer to help your debt problem. Better debt managing can save you money later on.

A personal loan is money from a lender that you pay back in monthly payments. You will borrow money with a certain interest rate. The interest rate will depend on your credit score and where you get the money.

While there are different variations of personal loans, there are primarily two main types. Unsecured loans are loans that don’t require any collateral. This means the personal loan finance company makes a decision about whether or not you will qualify based on your financial history and credit score. If you don’t qualify for this type of loan with a low interest rate then your second option is a secured loan. Secured loans require collateral. If you don’t pay back the loan then the lender has the right to take your collateral as a form of payment for the loan. Many of the consumer installment loans available are unsecured and since the lender isn’t able to get your assets if you don’t pay back the loan, the interest rates can be higher compared to other types of unsecured loans.

How to Use a Personal Loan to Save Money

There are multiple ways to use a personal loan to save money, but not everything will suit your situation. To help you get informed on how you can help better your circumstances by taking out a personal loan, we will describe the most frequent situation where you can use a personal loan. If you are in a position to think about a personal loan, you should definitely do it.

Consolidate Debt

Debt consolidation is the process of taking your debts and using one loan to pay them off at once. A personal loan may allow you to have a lower interest rate on your debt to help you pay it offer faster. First, you must add up all your credit card debt and other debt. Most people choose not to include their mortgage in debt consolidation and instead just choose credit card debt. Types of debt that can be consolidated are credit cards, auto loans, payday loans, lines of credit, medical bills, legal debt, and gambling expenses.

Loan Shopping Advice

Once you have an idea of how much debt you have then you know the amount of money you will need for a personal loan. Be sure to do some personal loan shopping, in order to find the best rates. You can choose to visit your local credit union or search online. Online lenders will let you pre-qualify for a personal loan so it doesn’t affect your credit score. In addition to looking at interest rates, you should also look at other fees upfront, such any origination fees that can vary between 1% and 5% of the total loan amount.

One of the best places to look for reputable lenders online is Loanry. This is what we do. We connect you with credible lenders and help you go through this process a bit quicker.

After You Get Approved for a Loan

Once you have the money deposited in your account, which doesn’t take long if you get approved online, then you can pay off your debt and on your credit cards with that money and afterwards focus your attention on payments to your personal loan. When choosing a personal loan, be sure it’s an unsecured loan. Unsecured loans don’t require any collateral. Even though there may be higher interest rates, this won’t put any of your assets at risk if for some reason you have issues with payment.

When you use a personal loan to consolidate debt, you can reduce your interest rate. If you qualify for a lower interest rate then you can use a personal loan to save money. It also helps to lock in a low rate. Sometimes when borrowing money your interest rate is variable and changes. This means that it can go up and down. If you don’t want to owe money at variable rates anymore then a fixed rate personal loan can allow you to know exactly what your payment will be. Avoid personal loans with low teaser rates since these rates do go up. Find the maximum rate you could be charged for any loan you are using for consolidating debt.

Repaying a Loan

With a personal loan, you have a repayment timeline. You agree to pay back the money you take out from a personal loan on a set schedule that is specified in the loan agreement. Since you will have this payment schedule you know exactly when you will become debt-free if you pay on time. If you want to pay off the loan early, check with your lender about any prepayment penalties. Depending on how your interest is structured within the loan, you may or may not have a prepayment penalty. If you don’t have one and can pay off the loan early then that means you can get out of debt faster.

When to Use a Personal Loan to Consolidate Debt

In your order to use a personal loan to save money, it needs to make sense. If you aren’t prepared, taking out a loan can just open you up to spending more money.

You Have a Plan to Pay Debt

Before you make a decision on a personal loan, you need to have a plan. If you just roll up the credit card balances into a big personal loan without an idea of how you will pay it back then there is no point. Will the new monthly payment be feasible? If you are struggling to pay it and end up relying on balance-free credit cards then you won’t be saving any money. It helps to be honest with yourself about your will power and what you can afford.

How Big Your Debt Is

Using a personal loan for consolidating debt is a good idea if you have a moderate level of consumer debt. If you can pay off your debt within the next five years then a personal loan can make sense. If you can expect to pay off the debt within the next six months to a year then a personal loan may not be worth it. The small amount of interest money you can save may not be worth the trouble. If you have no idea how you will pay off your debt in the next few years then a personal loan may not be enough. You likely need credit counseling and a professional that can help you out.

You Have Spending under Control

Consolidating doesn’t just make your loans disappear but instead it moves it around. The debt means you are living beyond your means. If you know the reasons you aren’t charging on your credit cards is just because they are maxed out then a personal loan may actually enable you to spend more. If you have already come to the realization that your spending was out of control and have vowed to lower it then a personal loan can help you streamline and simplify your debt.

Your Credit Score Is High Enough

If your debt has already affected your credit score then a personal loan may not be cheap enough to make it worth it. The credit score requirements for the best interest rates on a personal loan can be high. In order to get a single-digit interest rate, you need a credit score over 760. If you always make your payments on time despite your high balances then your credit score may be high enough to get a lower rate than what you currently have on your credit cards.

However, if you have missed payments then your score likely isn’t high enough for a good interest rate. If you can’t get a lower interest rate than your existing one then you may still have an advantage. You have fixed monthly payments and the loan will eventually be paid off. This can help you from getting stuck in the trap of just making minimum payments all the time and not actually making a dent in the debt.

How to Apply for a Personal Loan

Applying for personal loans can be an easy process, especially if you are working with an online lender. Online lenders will speed up the application process and give the money to you in a short time. Before you settle on any particular lender, you need to check interest rates and their charges. Every online lender will have its own customized rates and structures so you have to shop around before you decide on one. Shopping around is very important if you are trying to use a personal loan to save money. When shopping around and determining your rates, you will be required to provide some information and the lender will look at different factors. Some of the factors lenders will use include your credit score and history, your income and employment, and your debt-to-income ratio.

Advantages of Personal Loans

There are a number of advantages of a personal loan and if used correctly, you can use a personal loan to save money.

Consolidate Credit Card Debt

Debt consolidation might be one of the top three reasons that people use a personal loan. This is one of the ways for a personal loan to save money. If you have a lot of debt, why are you paying through the nose with high-interest rates when you can manage debt with a cheaper interest rate? A personal loan has become an easy-to-use tool for which a consumer can swap out higher interest rate credit card payments with a more manageable schedule of a personal loan.

By using a personal loan to consolidate debt, there are multiple benefits. The first benefit is clearing off debt from credit cards. This is known as revolving account debt and it will usually lower your credit score when the balance is high. The second benefit is changing the debt schedule. Personal loan balances don’t keep growing and are capped. As long as you make your payments then the loan will decrease and be paid off. However, this will only work if you don’t continue to rack up more debt on your credit cards. The third advantage is switching your debt to one payment. This can be easier from an organizational advantage.

Cash flow management can be a big problem, especially if there are multiple accounts to juggle. When you have your debt in one payment, you can pay it right when a paycheck comes in and it’s easy to manage.

Used for a Number of Purposes

Many bank loans are purpose-specific but personal loans can be used for just about anything. The funding gets approved almost immediately when you search for loans online. The lender doesn’t get in your business about what you are using the money for. Instead, they are focused on whether you are a good borrower, don’t have any late payments, and will pay back the loan on time.

Efficient and Convenient

With a personal loan, the process is quick. With a bank-funded loan, the process can take weeks. Sometimes, you may not have eight weeks to wait for financing to happen. There is a very fast approval process when you choose to get a personal loan. It will usually take to three business days. The funding will go directly to your bank account and show up quickly. The payment can also be very convenient. Electronic payments mean you don’t have to remember to put a check in the mail and can make sure you are paying on time.

How Does a Personal Loan to Save Money Impact Your Credit?

There are a number of ways a personal loan to save money can affect your credit. A personal loan can affect your credit score depending on the different actions you take.

Applying for a Loan

The formal application for a loan will trigger a credit check. This type of hard inquiry will take away some points for your credit score, although it doesn’t make a big impact.

Shopping for a Personal Loan

Many loan places will allow borrowers to pre-qualify using a soft credit check that won’t affect your credit score. This will allow you to shop around for different lenders in order to find the best rate and terms. When you are comparing multiple lenders, inquire about whether or not the lender offers the soft check to help protect your score.

Repaying the Loan

If you repay the loan regularly then this can help your credit score. Your ability to repay a loan will make up about 35% of your credit score. A consistent record for one-time payments helps build your score in the long run. However, if you miss a payment this can negatively impact your credit score. Even if you don’t miss a payment and are just a few days late, your credit can still be affected.

Different Elements of Personal Loans

There are several elements that can affect a personal loan. If you are getting a personal loan to save money, you will need to be aware of these different elements and how they can affect monthly payments.

Interest Rate

The interest rate will have a big impact on payments. It’s the amount of money you pay to the lender on top of the money you took out for the loan. The interest rate on a personal loan will stay the same throughout the length of the loan term.

Term Length

This is the amount of time the lender gives you to repay the loan. Personal loans will have a fixed time length and you need to make the payments on time. Payment amounts will always be the same. The terms on a personal loan can range between just a few months to even longer than five years. Three years is the average that people have to pay off their personal loans.

Borrowing Maximum and Minimum

This is the minimum amount and maximum amount you can borrow. Some lenders can give higher amounts to those with great credit scores.

Prepayment Penalties

Like many other loans, personal loans can come with stipulations when it comes to repayment. If you want to repay faster than the stipulated period then be sure to check the prepayment agreement to see if there are any penalties.

Inclusive Fees

Many lenders will apply several different fees to personal loans. These fees can include origination fees and service charges. An origination fee is the amount of money you have to pay at the start in order to have the loan set up. When applying for different loans, be sure to read the fine print so you know what fees you will be responsible for.

APR

This is the amount of money you pay every year in order to borrow a loan. This fee will also include the interest rate. This is the total amount of money you are charged with every year when you borrow for a personal loan. Just like interest, your APR will depend on your credit score.

Personal Loan Basics Spelled Out: Loan Shopping 101

How Interest Rates Impact a Personal Loan to Save Money

Personal loan interest rates make a huge difference to the monthly payment. Your credit score is one thing that will directly impact the monthly payment. The better your credit score, the lower the interest rate you can get. If you want to consolidate debt then you need a lower interest rate. If you don’t get a lower interest rate, then what is the point? For example, if you get a personal loan of $20,000 and the interest rate on the loan is 10% then the total interest you will be paying is $2,000. If you have bad credit and have a 25% interest rate on the same amount of money you are now paying an extra $5,000 on your loan amount.

Ways to Qualify for a Personal Loan to Save Money

If you are getting a personal loan to save money then it’s about more than just getting approved. You want to get the lowest interest rate possible. The best thing to do is to make sure that your credit score and history are in the best shape. This is what lenders will rely on to establish your finances and borrowing behavior. In order to improve your credit score, be sure to check your credit reports and notice any errors. If you notice an error then file a dispute to fix it. Be sure to fix any late payment issues.

You should also reduce your debt as much as possible. Your debt-to-income ratio and the amount of debt you have helps determine whether you qualify for a personal loan. In order to increase the chances of qualifying for these loans, you should reduce debts as much as you can.

In order to qualify for a personal loan with low income or bad credit, you can get a co-signer. However, if you are looking at using a personal loan to save money then this may not be the best option. Even with a co-signer, you still may have high-interest rates and you are putting your co-signer at risk if you don’t pay back the loan.

One way to make sure you get a good interest rate is by personal loan shopping. Shopping around for personal loans will allow you to identify lenders with flexible loan terms and requirements so you can make sure you are getting a good interest rate and avoiding fees that will not end up saving you any money.

Uses of a Personal Loan

There are plenty of different ways to use a personal loan. It’s even possible to use a personal loan to save money. The flexibility is one of the biggest advantages of using this kind of loan. These types of loan can cover anything as long as you have a credit score that allows lenders to take a chance on you.

Home Repair

Sometimes you may find yourself needing to make home repairs but you don’t have the money to pay a contractor. Emergency home repair loans can help. These loans give you the financing you need and allow you to pay back the loan over a period of time. Home repairs can come in different forms and while there are some projects that you may be able to do yourself, sometimes you just need to call in a contractor.

Car Repair

Car trouble is almost always unexpected and it can be hard to go without a car. A personal loan for auto repair can be a good way to get your car fixed with a lower interest rate and monthly payments you can afford. While there are other options for getting your car fixed, you need to make sure you evaluate them in order to make the best decision. While a car is a necessity, check to make sure the auto repair is worth it before you go into debt.

Medical Expenses

Medical expenses are one of the top reasons people use personal loans. Examples can include dental work, fertility treatments, and other procedures that generally cost $5,000 or more and aren’t typically covered by medical insurance. Other expenses, such as medical travel, medications, and aftercare, can also be financed by a personal loan for medical expenses.

A Large Purchase

If you need a new washer and dryer or a new computer and don’t have the funds then you would have to dip into savings. Some of these items can end up costing you more than what you have in a savings account. Personal loans will allow you to purchase major household appliances and electronics now when you need them, instead of having to wait months to save up.

Debt Consolidation

Many people want to use the money they get from a personal loan to improve their financial situation. One of the ways to do this is by using a personal loan to reduce higher interest debts. Using a personal loan makes it possible for people to pay down their debts and lower the interest on the debt. When you reduce the overall interest amount, it reduces the amount of money you pay on your debt or the duration it takes to pay it off. You can also make single payments to make managing debt even easier.

Whatever your reason for getting a personal loan is, it’s important to keep a few things in mind. You only want to borrow what you need for the expense and what you can comfortably pay back. Don’t increase your debt for reasons that aren’t important. Taking a personal loan when you don’t have a source of income to be able to pay it back can be a costly mistake. While personal loans are flexible in their uses, this may not be a good strategy for buying gifts, paying for vacations, or other luxuries.

Conclusion

Personal loans have a lot of different uses. It can be easy to apply for a personal loan online where you can shop around for different rates to make sure you are getting the best interest rate possible. In order to use a personal loan to save money, you need to make sure you are getting the best interest rate available.

One of the main advantages of a personal loan to save money is to use it to consolidate debt. When using a personal loan to consolidate debt, you need to know when it’s best to use it. Unless you have a plan in place for debt repayment, a personal loan may not be the best choice. In order to increase your chances of lenders approving you and getting a better interest rate, you need to work on your credit score. Personal loans can also negatively impact your credit score if you aren’t careful about payments or fail to shop around for a loan correctly.

Should You Finance TV and Audio Equipment? Turn off!

The answer to this question is really a personal one. There is no one size fits all. You might have people tell you that it is a bad idea to finance TV and audio equipment, but that is not always the case. Handled responsibly, any kind of debt can provide benefits that help you down the road, like building your credit. At the same time, going into debt for the simple sake of going into debt is not usually a good idea. But there are still many good reasons to use a loan. Should you finance TV and audio equipment? I hope that by the end of this article, you will have enough clarity to answer that question for yourself.

How Do You Know If It Is Smart to Finance TV and Audio Equipment?

Whether it is smart to finance TV and audio equipment really depends on you and your financial situation. If you can afford to pay for it outright, that would be a better option. If cannot pay it outright but can easily afford the payments, you should be okay. On the other hand, if you are currently fighting every month to pay your rent and keep your lights on, I am going to say that it probably is not a smart idea.

Take a look at your financial situation on a very honest level. Is your current income taking care of all you need? Do you have more important financial goals, like a new car or a vacation? Does the idea of financing this equipment make you nervous?

Let’s simplify this answer a bit. If financing TV and audio equipment will interfere with feeding your family, paying your utilities, keeping a roof over your head, or any other drastic thing, stop where you are. Do not pass go. No amount of technology is worth your or your family’s well being.

If you can make payments easily, it really comes down to if you want to make the payments. You have the power to choose one way or the other. I have to admit, there are good reasons for getting a loan, but you need to look at the circumstances you are in. Hold on, though. Do not jump up and run to the store just yet, or give up on your equipment. Let’s make it through the whole article first.


Saving vs Financing

If there is one thing I miss seeing in the world, it is patience. When I was a kid- which really was not that long ago- we had to wait for things. There was nowhere near as much instant food available then. If we were hungry, we had to wait until the food was cooked. If we wanted to see a movie, we had to actually drive to the video store and hope that someone else had not rented it.

Video tapes and cassette tapes were the biggest entertainment, both of which had to actually physically rewind. I learned patience because I wanted to watch my favorite movie over and over, so I would sit in front of the VCR and listen to it rewind, just waiting to hear that click that meant it was through.

Oddly enough, people had to be even more patient in my grandparents’ day, and their parents’ before them. Over all of these years, amazing technology has been created. It simplifies life, brings cures and treatments to people with health problems, and so many other incredible things. It seems, though, that as it came into our world, patience ran the other way. TV and movies are available on tiny devices that we can talk on. Microwavable food takes up a huge section in the grocery store. The only places you seem to find yourself waiting now are in checkout lines and doctors’ offices.

This is the problem

We have been conditioned to expect instant gratification. We want what we want and we want it now. Is it any wonder that there is such a huge amount of consumer debt while the majority of adults have no money saved? We have been taught to worry about the here and now, not the future. Sadly, this is leading to a lot of financial hardship. If we can relearn, as a whole, to save money, to only spend when we have saved enough, we can begin to change our little parts of the world- and our families’ futures.

The question now is whether you can be patient or not. If you can be patient and save the money instead of choosing to finance TV and audio equipment, it will be extremely rewarding. After working and putting money away for something you desire, and then finally bringing it home 100% yours is an awesome feeling. Knowing that you really, truly own it feels so much better than knowing that you have to start making payments in a week.

How to know you really want something

I have also found that when people work and save for an item, they sometimes discover that they really do not want that item. The original desire for the item was really just an impulse or a reaction to something. After they have had time to think about it, the excitement wears off. Suddenly, it is no longer a priority because it really was not important to them in the first place.

What to expect if you choose to finance

There are other downsides to financing besides the lack of internal reward for working hard and buying what you want. If you choose to finance TV and audio equipment, you will be paying interest. Even though there are very good reasons to get a loan, you will still be in debt. Not to sound overly dramatic, but debt in any form is a burden you must bear. Until the debt is paid off, you are basically enslaved to it.

Think about it like this: When you save the money to purchase your TV or audio equipment, you do all the work upfront. Before you bring it home, you work hard, save, and look forward to the day you get to make your purchase. It is an exciting time. When you finally make the purchase and bring home your equipment, you know that there is no work left to do for it. You have paid all that you need to pay, so now you can actually enjoy your next off day.

Now, imagine you finance TV and audio equipment. You go into the store and pick out what you want. You get it home and set it up. Maybe you enjoy it for a couple of days, but before long, reality sets in. Before you went into the store, you had some freedom. Now, not so much. For the next six months, 12 months, or however long your finance term is, you will be making payments. Your mind begins to associate your equipment with stress and poof! The enjoyment is gone.

Is It That Serious?

I want you to ask yourself one simple question: Is it that serious? I know that some avid sports fans are going to want to yell at me for this question, and maybe a few others, but that is okay. It is an important question that can put all of this into perspective. Is your need or desire for TV or audio equipment serious enough to be in debt for it? Is it serious enough to put other needs and wants to the side while you make monthly payments?

For some people, the answer will be, “Yes,” and that is completely okay. I merely want you to consider the gravity of the decision to finance TV and audio equipment. If you are willing to pay that price, that is your choice. Just keep in mind that there are downsides of loans. Others may have decided that it is not that serious, but they still want to watch their stuff or listen to their music. The good news is that there are some alternatives to having to finance TV and audio equipment:

Mobile Device

If you have a smartphone, tablet, or laptop, you have the ability to watch almost anything that you watch on your television. In addition to many TV shows being on Netflix and Hulu, many channels also have a website and an app. This includes kid’s channels, as well.

Cheaper Options

I realize that some cheaper or used items may not be the best, but you can find TVs and audio equipment in a lot of places. Thrift stores constantly have TVs. Pawnshops often have loads of electronics and music equipment for a fraction of the original cost.

My father has been a musician my entire life. I cannot tell you how many times he came home excited to tell us about the guitars he would find at pawn shops. I had not learned the differences in brands at that time, but his excitement told me that it was a great deal. To this day, he still finds treasures at pawn shops and tells us all about them.

Other than thrift stores and pawn shops, consider looking online. Facebook has the Marketplace now where you can find items from local sellers. Craigslist is another option. You might also just try Googling the product. Often, if you scroll past the first few search results, you can find a website that offers some really good discounts.

Where to Finance TV and Audio

If you choose to get a personal loan instead of retailer financing, you have many loan places to choose from. There is always your bank if you have one, or local community credit union. While these can be great options, it sometimes takes a few days to get approved.

Online lenders are often the easiest to apply through since you can apply for multiple ones at one time, apply at any time of the day, and typically get results in minutes or hours. Even better, there are lenders online for all credit types. So instead of calling or driving around town for someone to accept your credit score, you can easily do so online. For those who feel that they cannot wait for another second for their new TV or audio equipment, there are fast loans available, too. Taking out a loan for a larger purchase can be a good idea if you weigh all the options.

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.

What About Using a Credit Card?

A credit card or a loan? If you have a credit card with the available credit, you might be tempted to charge your equipment and be done with it. This may not be your best move, though. Any time you cannot repay the charge amount within a month or two, you should opt for a personal loan instead. Otherwise, you will likely pay more in interest than you did for your equipment, and it typically compounds monthly. It is not a pretty look.

Personal Loans versus Credit Cards: What is Better?

How to Save for TV or Audio Equipment Without Waiting for Years

Yes, it takes time to save up some money, but there are ways to speed it up. First, you need to pick out the equipment you want and determine the price. Let’s imagine you find a huge smart TV that you want in your living room, and the price is $1,000. Take a look at your budget and decide how much you can realistically but to the side every week without going without necessities. For our example, we will say $20 a week. If you only save that amount, you will have the full cost of the TV in 12.5 months.

Since you decide you do not want to wait a year for the TV, you need to set a realistic goal of when to purchase it. Now, I am all for dreaming and pushing my boundaries, but if you are not willing to hustle enough for $1,000 in one month, do not set one month as your goal. Ask yourself just how hard you are willing to work for your TV, and set your time goal around that.

If you decide you want to do it in three months, you will need to save about $334 per month. You have already determined that you can save $20 per week from income, so that is $80 to $100 per month, depending on how many weeks are in the month. If you put $80 up from income, that leaves you with $254 more to save each month- and that is totally doable. Here are some ideas to get you going:

Yard Sales

I suggest yard sales all of the time because I know how lucrative they can be. Dig out some things you really no longer want or use- when is the last time you actually went bike riding?- and sell it all. I have known people to make as little as $50 and as high as more than $500. You might get a nice surprise and end up with all of the money you need in one weekend just from yard sales.

Odd Jobs

If you ask around, there are probably at least two people close by that need some help with things like cleaning out garages and sheds, yard work, babysitting, pet sitting, house cleaning, house painting, window washing, or even cleaning gutters. Ask around. A few odd jobs can help pad your savings pretty quickly.

Double Check Your Budget

Is there anything you can cut back on while you save for your TV or audio equipment? If so, rework your budget until you make your purchase.

Personal Consumer Loan vs Retailer Financing

You might find that the retailer will allow you to finance your TV and audio equipment through them. Is this a better idea than a regular consumer loan? Well, that depends on the differences in the interest rates and the terms.

I will say that on a regular day, going through a lending service on your own will probably be the best idea. Sometimes, though, the retailer is able to offer some excellent financing options that include 0% interest for a set period of time. Obviously, if you can choose a loan with no interest over one with interest, go for the one without.

Be sure, though, to ask questions and read your contracts. When I worked at a mattress retailer, we had financing options from two lenders. One was great for those with good credit because they were the ones who would receive the 0% interest. The secondary lender was intended for those with bad credit. On the one hand, it was great that more people were able to get a quality mattress. On the other, no one was reading or paying attention to the terms.

Getting a loan with bad credit

One day, a previous customer of a coworker had come in looking like her head was about to explode. As I approached her, she started yelling about her payments. After a moment, I was able to calm her down enough to find that my coworker had not broken down how that secondary lender worked. They offered 6 months same as cash, and most customers were okay with that. Why? Because they thought that interest would simply start after those six months.

The truth was that if you did not pay the full amount in that six months, the interest would be calculated against the entire amount borrowed and compounded monthly. It did not matter if they had paid the loan down, they were still being charged full interest. If you accept any type of financing, read the fine print and ask as many questions as you need to understand the process.

Stay Away from Rent to Own Shops

There is a great temptation calling to consumers with bad credit or no money: rent to own shops. My city is not very big. But there are still five of these stores almost in throwing distance of one another. They throw out advertisements telling you how little you can pay each week to own the things you want. Sometimes, they will hit you with a double- whammy by giving you “the first week free” or “$10 pays your first week”. Or, my favorite, “6 months same as cash”. It sounds too good to be true- because it is.

There is nothing cheap about these places and their items. Most of them are increased to three times their actual price. The same as cash price is basically impossible to pay, unless you are drowning in money. If that is the case, you would not have to shop in a rent to own store.

I really could go on about these places all night, but I will stop there. There are consumer loans out there that offer good terms. These are not those loans. Bottom line: stay away from them if you value your money at all.

Conclusion

I hope that this information has helped you come to a decision about financing your equipment. If you really think through your situation and weigh out the pros and cons of borrowing, you should be able to make the right decision for you. If you choose to finance TV and audio equipment, be sure to make all of your payments on time so that you do not mess up your credit. Also, look for a reputable lender and remember to read all of the details before signing any paperwork so there are no surprises.

Can I Use a Personal Loan to Pay for Major Appliances?

Just a few months ago, I had what was likely the worst two weeks of my life when it comes to appliances. One minute, we are going along in life and everything seems ok. The next, my oven suddenly stopped working. This was terrible for me for a couple of reasons:

1.) I love to cook and bake, and
2.) with 6 mouths to feed, I have to cook to save money.

Needless to say, the lack of oven threw me for a loop. Personal loan for appliances comes to mind. But wait…

As if that was not enough, two days later my hot water heater stopped working. The following week, my dryer stopped and my main air conditioner went out. It was insane in my home. And while I could normally think through things enough to figure out how to replace something, I had four major appliances to replace at one time.

Have I figured it out?

Burning hot and overwhelmed, I honestly had no idea what to do. I was not even sure where to begin. All of these appliances played a huge role in my home, but I did not have the money to replace any of them. What does one do when appliances break down with no warning? I wish I could tell you I have it all figured out now, but that is not true. What I do have is some progress and a plan, as well as some other ideas to share with you. I hope you are not facing the need to replace multiple appliances like me, but whether you need one major appliance or ten, these steps and ideas can help.

Assess the Situation with as Much Honesty and Clarity as Can Be Found

Man with a check list icon

After the shock, the overwhelm, and the well deserved pity party stopped, I gave myself a pep talk. It went somewhere along the lines of, “Put your big girl pants on and get to work. No one is going to just hand you what you need. Figure it out.” From there, I went to my white board and started really analyzing my situation. I asked and answered the following questions:

Are all of these major appliances necessary for survival?

Let’s be honest, none of them really were as people have lived without them all before. We have become conditioned to believe these items are necessities because they are the norm. So first, I let myself breathe a little. However, I happen to like all of these non-essential luxuries. I like hot showers. Also, I like to pull my clothes out of the dryer smelling like my favorite fabric softener. I love to cook, and I really hate to sweat in my own home. No, they are not necessities, but I want them back, which leads to the next question.

Is there a tolerable and affordable alternative to any of them at the moment?

As much as I love my freshly dried clothes, there is really no reason I cannot hang clothes to dry for the moment. For that matter, there are about 20 laundromats in my area if I just really want to dry them for now. And since the stove eyes still worked, I was not totally without being able to cook, and a toaster oven lets me bake a few things. As a nice surprise, my sister gave me a rotisserie machine that she was getting rid of, which was really awesome since she did not even know my oven was not working. Between my toaster oven, rotisserie, and stove eyes, I can still cook a good meal.

As far as the air goes, it is definitely a priority in this Alabama heat. The inside of my home stays hot enough that I probably do not really need an oven, so we had to get the air conditioner working. And the hot water. It may be hot but I still do not want an icy shower. After I determined that these were the top two priorities, I moved on to calculating the costs of each and planning the purchases. Since I still did not have enough in savings to replace these two appliances, I had to consider other means, and that included a personal loan for major appliances.

Reasons People Get a Personal Loan for Major Appliances

Since personal loans can be used for pretty much anything, it is not odd to consider on for major appliances. The problem is that most people jump into a personal loan for major appliances without thinking it through or really needing one. Quite often, this is either because they are desperate or, like I mentioned earlier, are convinced that the appliance is a necessity right at that moment.But of course, there are times when there are good reasons for using personal loans. 

As you can see from my story, necessity is relative to the individual’s or family’s opinion. If you deem an appliance as immediately necessary, no one should try to convince you otherwise as priorities are different in every home. If you choose to get a personal loan for major appliances, you will be in good company as many others do the same. Make sure you assess the situation and find your reasons for getting a personal loan. 

The Many Reasons to Use A Personal Loan

 To Get a Loan or Not to Get a Loan…

Getting a personal loan for major appliances is a completely personal choice- along with your spouse or significant other, of course. The key is really to just think it through. Jumping into any kind of debt without careful consideration is not a good idea. Also, some things are not worth financing. When making the decision, you should really consider your current budget. Can you afford an extra payment every month? Many people’s budgets are stretched to the max already. Adding in another payment would cause some severe problems. This does not necessarily mean you should give up. There are advantages to getting a personal loan. That loan just might help you in more ways than one if you make wise moves.

Things to consider

For instance, if your budget is stretched due to other debts that you are currently repaying, you might consider getting a loan that would consolidate those debts and pay for your appliances. This type of move could let you breathe while making lower payments with lower interest. As I said, you need to be wise with this, so before you make this move, be sure that the interest rates of the personal loan and the payments for the loan are lower than what you are paying now. Otherwise, you will continue your debt cycle.

Pros and Cons of a Personal Loan for Major Appliances

As with all things in life, there are pros and cons to getting a personal loan for major appliances. On the positive side, you can replace your major appliance very quickly. Instead of paying it all up front, you get to spread the cost of the appliance over a number of months or years, depending on the specified repayment terms. The interest rates of a personal loan for major appliances are generally much lower than credit cards and other options, so you save some cash. On top of all of those benefits, if you make your payments as you should, you will improve your credit.

The downside to a personal loan for major appliances is simply having a debt you have to repay. Debt interferes with budgets and usually puts financial goals on hold. And, even with low interest rates, you are still paying interest, and possibly fees. Also, if you do not pay your payments as you should, you will mess your credit up- something nobody needs. Repaying debt can be a real struggle.

Alternatives to a Personal Loan for Major Appliances

Before running to your local lender, take a step back and consider these alternatives to getting a personal loan for major appliances:

-Family and Friends

I know not everyone has family or friends that can or will help them out, but it never hurts to ask. Maybe they cannot front you the cash, but they just might be getting rid of what you need. They also might know someone who is selling what you need for cheap. No, they will not be brand new, but if they work, you can utilize them until you can save the money.

-Credit CardsCredit card icon

Credit cards can be used for major appliances, if you have enough available credit, but it might not be the best choice. Some credit cards charge higher interest rates than lenders do, and the interest compounds every month. On the other hand, if you are in an introductory 0% interest phase, the credit card would be your best bet provided you pay off the appliances before the introductory phase is over.

-Work for It

Of course, you can always work to pay for your major appliances. Pick up some extra shifts or a second job. Here is another secret for you: if you can find a job waiting tables somewhere, you can make it pretty quick. If you go to a restaurant that keeps a really steady stream of customers and take good care of your tables, you can make hundreds over one weekend. It is not a job you want to do forever because it is a stressful job and can break your body down if you are not careful.

However, picking up a couple of shifts on the weekends for a while can help you reach a lot of your financial goals quickly. When I went through my appliance meltdown a few months ago, I was tempted to go back to serving myself. I knew from experience that I could have the cash in my hand to pay for all four appliances in three weeks or less. As my health is one of my top priorities, though, I opted to focus my attention in other areas.

-Thrift Stores/Second Hand StoresStore icon

If you did not know, here’s a secret for you: thrift stores and second-hand stores are awesome. You can find all kinds of affordable goodies in them. Of course, you want to clean them up when you get home, but if they work, cleaning is a small price to pay for an affordable appliance. With the money you save, you can pay a teenager or college student $20 to clean it for you if you want.

Do not just look at thrift stores, though. Ask around for little family-owned businesses in your area. We have one close by that fixes up old appliances and resells them for affordable prices. Sometimes, if they have the space for it, they will take your old one to fix and resell while giving you a discount on your new ones. Check around for similar stores in your neighborhood.

Where to Get a Personal Loan for Major Appliances

You have a lot of loan places you can utilize to find a personal loan for major appliances, other than traveling all over your city. The following are some of the categories:

-Online Loan Places

Applying for fast loans online is extremely simple and convenient- and totally free since you do not have to spend gas money. You can find online loan places to help you with your situation. There are lenders online for all credit types and all borrower situations, though some may require some collateral from you if your credit history is unsatisfactory. One of my favorite parts of doing anything online is that I can do it at anytime: while I am sitting at my kids’ dentist appointments, while I am finally getting to catch up on the latest episodes of The Blacklist and Hawaii Five- O, or when I have been working all day and finally have a moment at 3 a.m. The accessibility and convenience are two great reasons you should consider applying online. You can do so right here on Loanry.

-Retailer Financing and Store Credit Cards

Another great place to find a consumer loan is through the retailer themselves. Major retailers are often connected with lenders that can help get you the items you need. Like credit cards, you have to pay attention to the terms and interest rates here. At times, retailer financing can be your best bet because they run specials that offer 0% interest for certain time periods, even up to five years.

Here is the secret though: those lenders offer that promotion to get you to borrow, and you will get that time period without interest.  However, they feel comfortable offering such long period interest-free because most consumers do not pay the financing off in that time period. If you take advantage of an offer like this, pay more than the required payment each month so that you can pay it off during the promotional period.

Additionally, many large retailers have store credit cards. When you find the appliance you want, look around for a retailer that has financing available. Compare the interest and terms to that of your credit card and a personal loan for major appliances to choose the best avenue of financing.

-Banks and Community Credit Unions

Banks and credit unions are always an option, but banks tend to have more stringent requirements for loans. Try your local credit union as they are dedicated to helping their community as much as possible. One way they do this is by lowering the requirements of loans, so they are an option for more people. You might find that you can get a good loan with great terms from your community credit union.

Where to Avoid Getting New Appliances

What I am about to say is probably the most heartfelt thing I can tell you. For no reason whatsoever should you step close to rent-to-own places. Absolutely avoid them at all costs as they are no better than title loans and payday loans when it comes to a debt cycle. I learned my lesson the hard way. I was a young clueless nineteen-year-old. Since I was waiting tables and had few responsibilities, I had money to burn.

Not all recommendations are great

One day at work, I mentioned wanting to get decent furniture for my apartment. A coworker suggested I go to the rent-to-own shop that she was getting her TV from. Talk about the blind leading the blind…and like the naïve teenager I was, I went straight there after work. I was elated to learn that I could afford a living room suit, bedroom suit, and a computer without hurting my wallet.

Since my coworker had already explained the process, I really did not listen to the salesperson explain it. I was imagining how awesome everything would look in my apartment. I made my payments faithfully and thoroughly enjoyed my new furniture, until about a year later. When I had gotten the furniture, after the excitement calmed down, I had calculated that if I made every payment on time, I would have everything paid off by a certain date.

The plot twist

As that date was approaching, I started really looking at my payment receipts and saw that I still owed thousands. It was actually almost the amount I started out owing. And that was the day I learned all about how rent-to-own places make their money. The original amount they quote is already two to three times the price you can purchase it for. Then, they add that ridiculous interest. By the time you realize what is going on- like me- you have invested so much in the product that you do not want to send it back. It is a trap. I could not even be upset with my coworker either since she had no clue to start with either.

If you are in great need, however, you might consider renting from one for a couple of weeks. For instance, if I had no other way to cook after my oven quit and no money to buy a new one yet I had a good check coming in two or three weeks, I could have rented an oven until that check came. That is the one really good thing about rent-to-own. You are not locked in a contract so you can send something back when you need to.

Conclusion

Major appliances do play a major role in our lives. If you are extremely accustomed to having an appliance and it suddenly stops working, it can feel a lot like missing a part of yourself. You suddenly have to figure out how to live without it. That can be difficult when you have no alternatives available at the time. Even at your most desperate times, try not to make any rash decisions.

Getting a personal loan for major appliances now just to lose it for non-payment in a couple of weeks is not going to help you one bit. Same goes for any loan. Even if you want to get something else, like a loan for a computer, think carefully about the reasons for getting a personal loan.

Instead of acting out of emotion, think through your situation logically and analytically. If you must, ask yourself what advice you might give a friend if they were going through the same situation that you are. Quite often, people on the outside can see things that those on the inside cannot. So, looking at it from a different perspective might help you come to a better solution. However, if you absolutely must or choose to get a personal loan for major appliances, be wise about it by carefully considering the terms of the loan.

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.

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.

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.

Will Lenders Use Blockchain Technology Soon?

More than a decade ago, anonymous writers using the name Satoshi Nakamoto published a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” The whitepaper explained a system through which electronic transactions could be carried out without relying on one-on-one contact.

Also known as blockchain technology, this system formed a foundation for cryptocurrency transactions.

Blockchain technology has the potential to dramatically impact the society almost as much as the internet has.

Will Moneylenders Start to Use Blockchain in the Future?

Simply put, blockchain refers to a series of data record or ledger which is managed by a network of computers which are not owned by an entity. Each of these ledgers or data blocks is secured and bound to other data blocks through cryptographic principles, that is, chains.

The blockchain technology is decentralized. This means it is not centrally controlled by a corporation, bank, or government. Since the ledger is shared, the information is open for all those in the network to see. This makes blockchain technology very transparent as everyone can see and certify all that has happened throughout the chain.

How Blockchain Technology Works

Bitcoin is the most known and widely discussed blockchain technology. Therefore, we will use it to give you an idea of how blockchain technology works.

Just like monetary exchange mediums such as dollars, pounds, euros, and so on, a bitcoin is a means of exchange. The only difference is that the latter is a digital currency. The digital currency has no value unless in itself unless we use it to buy goods and services. Unlike conventional currencies whose source is the central bank, bitcoin is decentralized. Rather, a network of people called miners or nodes run the network. These nodes or miners compete to solve intricate problems to complete a transaction.

For example, figure a scenario where several people are carrying out bitcoin transactions. Every person initiates the transaction through a “private key.” A private key is a digital signature that acts as proof that the transaction came from a specific wallet owner. All these transactions form a block with strict cryptographic rules. The private wallets of those transacting are either credited or debited according to the transaction instructions. Each node on the network receives a message and automatically updates the account balances on the ledgers.

According to Marc Lowell Andreessen, an American software engineer, “Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.”

Advantages of Blockchain Technology

Some of the advantages attributed to the use of blockchain technology include:

1.Identity Verification

Blockchain technology has a reliable member identification process. This can significantly reduce time wasted manually verifying information submitted by loan applicants. For instance, you can create a digital account that has your information which is stored in a central repository. This includes data such as your credit score, income, mortgage history, outstanding debts, and so on. When applying for a loan from different lenders, all of them can access this data.

2.Improved Efficiency When Servicing Loans

Financial institutions often face challenges when it comes to loan transfer processes and collection. Through blockchain technology, it is possible to make such processes streamlined and more efficient.

3.Permanency

Transactions carried out through blockchain technology cannot be canceled, erased, or reversed. Each transaction is not only attributed to a specific person or corporate but is also time-stamped. It is also validated by every copy distributed throughout the blockchain network.

4.Lender Transparency

The processes and rules used in blockchain technology are handled by algorithms. The companies no longer need to reconcile their records as the data provided is authentic. Security is no longer a cause of concern as changes and facts are transparent. Lenders can also track the process right from when they submit their loan application up to the actual fulfillment.

Risks of Blockchain Technology in Lending

Blockchain technology allows for relative anonymity when carrying out transactions. For instance, a buyer only needs to know a seller’s address to initiate a cryptocurrency transaction. But can a lender guarantee that a borrower will pay?

Even though digital currencies and blockchain technology have proved their usefulness, new uses, and the implementation of public policies make them volatile. This makes the use of cryptocurrency as collateral expensive. Should you borrow before there is a drop in the value of cryptocurrency, you benefit from cheaper repayment terms. However, if your repayment coincides with the rise of a cryptocurrency’s value, repayment becomes quite expensive.

Applications of Blockchain Technology in the Finance Industry

The initial purpose of blockchain technology was to facilitate the transfer of cryptocurrencies. Today, technology has gone on to become one of the most secure technologies in multiple industries, including banking, medicine, government sectors, and so on. As the main focus of this post is the financial sector, we will explore some of the blockchain technology applications in banking.

  • Share Trading and Stock Exchange

Normally, share trading and stock exchange markets involve time-consuming processes, complex processes, and high costs. Besides, they are extremely risky. The application of this technology lowers the risks and challenges traders face.

For starters, traders can use blockchain technology to transfer shares from one participant to another as opposed to carrying out transactions through a centralized hub. This will have a huge impact in this sector as it promises faster exchanges, better security, and reduced risks due to enhanced transparency.

Due to the presence of intermediaries and third parties in the stock exchange process, traders have to wait for as long as three days to complete transactions. Blockchain technology simplifies stock exchange processes due to automation and decentralization. It also eliminates the need for third parties such as brokers and regulators as transactions and regulations are carried out through smart contracts. This not only ensures faster transaction settlements but also reduces operational risks.

  • Cross-border Payments

Although global trade has become commonplace, cross-border payment systems and processes have barely changed. Sending international payments existing banking channels is a complicated and multifaceted process that involves several intermediaries.

For example, if you have a company based in the USA, and you want to buy goods from Africa, you initiate the process by asking your banker to send the payment. Your banker collaborates with a correspondent bank for the transfer to be carried out successfully. A respondent bank in Africa receives the payment and transfers it to your dealer’s account. In most cases, you incur costs on each step as well as waste time. According to the World Bank, the average cost of sending payments worldwide is 7%.

Blockchain technology solves all these obstacles by storing and updating each transaction on a secure sharable ledger. It also streamlines the process by getting rid of middlemen and unnecessary fees. Once you initiate the transaction, the receiving party accesses the payment immediately. A transaction cannot be altered or reversed on the ledger. This fosters better security and accountability.

  • Digital Identity Verification

A key element of the advanced digital economy is the capacity to gather, check, and verify the identities of the parties involved in online transactions. The existing approaches used in sharing sensitive information often lead to poor data management or privacy vulnerabilities.

Blockchain technology enables people or organizations to have more control over what they consider sensitive information. Also, processes involved in identity collection, management, and verification are streamlined through direct data sharing and consistent verification processes.

  • Trade Finance

Trade finance should not be confused with stock exchange trading. It refers to financial activities related to international and domestic trade and commerce. In spite of the widespread use of technology and innovations, trade finance processes still involve a lot of paperwork. All the parties involve such as the importer, exporter, and shipper maintain a database of their invoices, bills of lading, inspection documents, letters of credit, and so on. Although order management systems enable you to carry out and verify such paperwork online, the process still takes a lot of time.

Blockchain technology reduces processing times when it comes to trade finance activities. It also saves you money and eliminates the use of papers while ensuring security, trust, and transparency. It also rids the process of unscrupulous middlemen, thus eliminating the risk of manipulation.

  • Syndicated Lending

This refers to loans awarded to individuals by several financial institutions. Due to the unusual number of participants involved, the process of awarding syndicate loans can take as long as two weeks or even longer. Also, financial institutions that provide such loans face challenges when it comes to client data verification. They also fall prey to money laundering activities.

Through blockchain technology, if one of the banks involved in syndicate lending has completed the compliance processes, all the others do not have to do it. This saves time and makes it easier to meet all the requirements needed in syndicated lending.

  • Peer-to-peer (P2P) Transfers

Blockchain technology has a huge impact on P2P transfers. While there are hordes of P2P transfer applications in the market, all of them have limitations. For instance, some allow you to only transfer money within a certain geographical region. P2P service providers also charge huge commissions, not to mention that the data you submit is not secure.

Blockchain-Lending-Process

Blockchain technology enables P2P transfers across the world. Besides, blockchain transactions happen in real-time. This means that the recipient does not have to wait for days or weeks to receive their money.

  • Fundraisings

Raising money through venture capital is more often than not a strenuous process. As an entrepreneur, you have to sit through numerous meetings with stakeholders, negotiate over business equity, and go through numerous valuations.

Blockchain technology has enabled different organizations to raise money through initial coin offerings (ICOs). This is carried out through public cryptocurrencies such as Ethereum and Bitcoin. In an ICO, entrepreneurs sell coins or tokens in exchange for money. The raising of over $4 billion in a year-long ICO by Filecoin is evidence that blockchain technology has revolutionized fundraising.

  • Auditing, Bookkeeping, and Accounting

Recording transactions by using blockchain technology eradicates dispenses with human errors and also protects this information from interference. Remember that records are checked, verified, and updated each time they are transferred from one blockchain node to another. Apart from guaranteeing high levels of accuracy, this process leaves behind a traceable audit trail.

The whole bookkeeping process likewise turns out to be increasingly efficient. As opposed to keeping isolated data records, a financial organization only need to maintain a single, joint register.

Implications of Blockchain Technology on Consumer Lending

Blockchain technology has dramatically altered the finance industry. It has effectively reworked the rulebook, especially when it comes to around ways to data management, ownership, and transparency. The use of digital currencies is reducing the costs associated with transaction costs, thus bringing about financial inclusion. This is particularly helpful to those who are left out of mainstream financial service providers.

Within the lending sector, blockchain technology will have a huge impact on the way credit bureaus operate. This is because it has successfully solved challenges associated with identity verification, data security, and information ownership.

Data Breach in Credit Bureaus

While banks and other lenders use several factors to determine your eligibility to a loan, the largest determinant is your credit history and your corresponding FICO score. This information is collected from such credit bureaus as Experian, Equifax, and TransUnion.

Despite there being protocols through which data from such credit bureaus can be accessed, the bureaus are not immune to data breaches. This is evidenced by the recent data breach on Equifax where information to around 143 million Americans was compromised. Another huge data breach took place in 2012 on Experian, where personal information belonging to around 200 million Experian customers was compromised.

Some of the ways through which blockchain technologies can address the challenges and inefficiencies associated with a centralized credit system include:

  • Individuals have Better Data Control

The use of blockchain technology puts back data ownership and control in the hands of the owners of the data. This is because there’s no longer a need to have a central data repository. As a borrower, you have free and constant access to your financial information. You can use it to borrow without the risk of identity theft or data leakage to unscrupulous individuals.

  • It will Boost Value Lending

Blockchain technology involves the use of a tamper-proof ledger where data integrity is achieved by technological design. On the other hand, data integrity in credit bureaus is quite arbitrary. Therefore, blockchain technology has the potential to successfully address outdated data practices employed by credit bureaus.

Decentralized ledger technology that has been made possible through blockchain technology will impact consumer loaning in various ways. For instance, blockchain records reduce the chances or out-of-sync data and redundancies. All information is shareable, and those who need to access it can do so using a cryptographic key. This implies that all parties involved in the loaning and lending process work using similar data sets. This reduces the possibility of miscommunication and errors.

Blockchain technology will make Know Your Customer (KYC) protocols faster and more secure. Financial firms often incur huge expenses in their quest to become KYC compliant. This is because KYC standards are more often than not broad and unclear.  In their Cost of Compliance 2017, Thomson Reuters reported that 53% of the participating firms expected inflation of their compliance budgets.

Blockchain technology could greatly improve credit reporting, which is a fundamental part of consumer lending. FICO scores and credit reports are used in the approval of loans. They also affect the loan approval amounts as well as the loan interest rates. As discussed, the credit reporting system is plagued with challenges, which include data inefficiency and insecurity.

Storing data across multiple nodes in the blockchain network eliminates the errors and risks associated with a centralized system. The automatic updates also take care of such inaccuracies as double entries. In the absence of data administrators, the cost of data also drops significantly.

Blockchain Lending

After the economic recession, which took place in 2008 in the U.S, financial institutions and big banks have worked hard to ear the borrowers’ trust. However, consumers are on the lookout for more trust and security when it comes to their lending needs.

Through the adoption of blockchain lending, conventional banks will become obsolete. The reliance on third-parties, such as credit bureaus will also be eliminated. The use of an automated and decentralized system will speed up the loan process and minimize operational risks. In short, the use of blockchain technology will improve the reliability and trust in an otherwise complex lending process.

Some of the features that characterize the blockchain lending community include:

  • Nature of the debt market – the market has a peer-to-peer network of borrowers and lenders. This diversifies risks and makes it possible to carry out cross-border transactions
  • Collateral – as these are digital transactions, borrowers pledge crypto assets as security for their loans. They trade this for a more acceptable currency such as Euros or dollars
  • Creditworthiness – most lenders have come up with their methodologies of assessing the borrower’s creditworthiness. What is provided as collateral is also valued. In most cases, the borrower’s creditworthiness assessment involves the use of FICO scores
  • Smart contracts – as agreements take place online, decentralized lenders make use of digital signatures to sign deals on loan agreements. Such agreements involve such info as maturity terms, the parties involved, the borrower’s creditworthiness, capital, and consequences in case of a breach.

Top Considerations in the Blockchain Lending

Blockchain technology is already being used to offer personal loans. Here’s where to get a blockchain loan:

Bitcoin Loans

Bitcoin is one of the most popular cryptocurrency loan places. A bitcoin loan works like a conventional loan. You borrow money and place your bitcoins as collateral. You pay back the loan along with interest over some time or as a one-time payment. This is as far as the similarities with conventional loans go.

As bitcoins are not associated with central authorities or banks, your bitcoin loan comes from other bitcoin users. Bitcoin loans are normally awarded through a peer-to-peer platform. To apply for a loan, you need to first create an account on your preferred lending platform as is the case with a bank.

A bank has to either underwrite the loan or sell the debt to another party as is the case with mortgages or a large commercial loan. On the other hand, no one banker holds a lot of BTC to loan out, therefore, your loan is published to a large audience of investors. This makes bitcoin loans rather appealing as you can get funding from multiple investors.

Ethlend Loans

This allows you to obtain P2P loans if you are on Ethereum Network. As a borrower, you have to post Ethereum Name Service (ENS) domains or ERC-20 compatible tokens as collateral against your Ethereum Loans. You will also be required to set loan data such as the interest premium, the loan’s duration, and the number of tokens you will place as collateral. Should a lender agree to the terms, they will credit your account with the loan amount.

SALT Lending

A secure automated lending platform (SALT) is a platform through which you can get Bitcoin, Litecoin, Ether, and Doge loans. SALT acts as an intermediary that connects borrowers to lenders. The platform is easy to join, and the interest rates are as low as 5.99%. The repayment terms range from one month to three years.

Personal Loan BlockChain

Challenges Facing Blockchain Adoption

Despite its revolutionary advantages, the adoption of blockchain technology is facing some challenges which include:-

1.Costs

Although the expenses charged on loan transfers are reduced, and processes are streamlined, blockchain technology is still relatively new. Lending firms have to customize the software on which lending and borrowing processes will run. A staff that is conversant with the blockchain technology has to be recruited. Where this is not possible, firms providing these services have to outsource. Adopting this technology means getting rid of existing systems. This is especially hard for organizations that take a stance of “better the devil you know than the angel you don’t.”

2.Lack of Skilled Blockchain Programmers

With the rise of blockchain technology to stardom, there is a low supply of software engineers, developers, architects, and programmers. Although in the end, this could change, the initial lack of talent is delaying the migration from conventional processes to blockchain technology.

3.Exploitation

Blockchain technology is quite vulnerable to exploitation, particularly in a situation if a small group of cryptocurrency miners controls the majority of the mining power. In this case, the miners may control transactions to maximize their profits. This challenge can be successfully solved if more people become cryptocurrency miners.

4.Privacy

All transactions in blockchains are visible. While it promotes transparency and openness, it is a challenge when it comes to corporations and governments who need to limit access to sensitive information. A permissible blockchain technology, where people can only access transactions related to them, takes time and money to create.

5.Regulation

Blockchain technology is governed by no legal framework. Cryptocurrency dealers fear that regulation will halt the adoption of this innovation. On the other hand, legal experts argue that regulation is the factor that will ease uncertainties and encourage blockchain adoption.

Governments around the world are still trying to figure out what blockchain technology is and how to regulate it. Likewise, stakeholders face the challenge of how they will shape regulations so that whatever rules implemented will bring about a win-win situation.

6.Association with Criminal Activities

Cryptographic forms of money, for example, bitcoins have been associated with criminal activities such as the dark web. Digital currencies make it easy for criminals to access restricted items on the internet. The security features of blockchain technology are not immune to cybercrimes. Case in point is Coincheck’s recent security breach where a total of $530 million was stolen.

What does the Future Hold for Blockchain Technology in Lending?

The stakes that blockchain technology holds are certainly too important for financial service providers to ignore. It will not only streamline operations and minimize expenses but also open up new ways of revenue creation. However, a larger percentage of consumer lenders are still in the planning phase. Numerous lending companies have initiated migrations to AI-powered consumer lending platforms as a way of gearing up towards blockchain technology.

Until lenders start using blockchain technology, you can always shop for a loan online. It is easy and won’t take you much time the whole procedure. Here at Loanry, we can connect you with reputable lenders who may give you a loan.

Conclusion

Blockchain technology’s instability and volatility are one of the key reasons why moneylenders have been reluctant to consider crypto-assets as security for loans. Borrowers are also hesitant to cash out cryptocurrencies for fear of missing out on massive profits. With the emergence of middlemen such as SALT, the parties involved in a transaction have guarantees in the form of smart contracts. These contracts enforce the terms of the loan, such as interest, loan duration, and repayment amount regardless of the asset fluctuations.