Solar Panel Loans: How to Use a Personal Loan for Solar?

Engineer and electrician team swapping and install solar panel

Like many people, you may have been thinking about going solar for a long time. There are a lot of reasons to go solar, but you probably don’t know much about the logistics of it yet. It will also require a large financial commitment in the beginning in order to install your new solar panels. You may even need to consider looking into solar panel loans. On the other hand, there aren’t really many disadvantages to going solar for individual homes, other than that you get less energy efficiency when you aren’t getting as much direct sunlight.

Types of Personal Loans to Help You Go Solar

If you haven’t spent much time researching loans before, it can be kind of confusing. There are different kinds of loans and lenders, and you can consider them all to decide which one is best for you.

Traditional Loans

Banks are traditional lenders, and most people think of banks when they think about applying for a loan. You hopefully have a bank that provides necessary services for you so you can manage your money and pay your bills. However, banks prefer customers with good credit, and they are more likely to offer poor terms to people with poor credit or even flat out refuse them. Banks can also take a long time to process a loan, which might not be good if you need the money soon.

Online Lenders

Online lenders used to be the ones people turned to if they had bad credit, but things have changed dramatically since then. Now online lenders are a great place to go when you need cash quickly, as you can get a response within 24 hours. If you search for a personal loan online, then you will also get a chance to compare rates among different lenders. You need to be careful though when using an online lender, and make sure you are dealing with someone trustworthy. Research well so you don’t fall victim to identity theft or fraud.

Fast Cash Loans

There are many personal loan options for good credit, but there are also some personal loan options for bad credit. Just like they sound, fast cash loans are available for people who need cash fast. Fast cash loans typically come in the form of payday loans or title loans. While you can get this type of loan really fast, you still need to be cautious. They typically have higher fees and interest rates than traditional loans. On the other hand, fast cash loans are much easier to get than traditional loans if you have bad credit.

Payday loans have very large interest rates and must be paid back by your next payday. Because you give the lender a postdated check — dated for your payday — for the full amount of the loan, you better make sure you have that money in your bank account when payday comes around.

Title loans require even more caution. Title loans use the title of your vehicle as collateral, which means that if you can’t pay them back, you will lose your vehicle. While lenders for payday loans will check your credit to make sure that you can pay the money back, lenders for title loans do not typically do this. Plus, their fees and interest rates are also very high, just like payday loans. The high amount you will have to pay back, plus having your vehicle put up as collateral makes this type of loan very risky for someone already struggling with money.

Secured Loans

Similar to title loans, secured loans require some sort of collateral; while this is typically a mortgage or a vehicle, other expensive items can also be used as collateral. Unlike title loans though, secured loans tend to have a lower interest rate, since the lender feels more secure and knows that if you cannot pay then they can just take whatever you are using as collateral.

Loans with Different Rates

Different loans have different rates and types of interest, and it is important to understand the difference between these different types of interest before you make a decision on accepting a loan offer. The two main types of interest are:

  •  fixed-rate
  • variable rate

Fixed rates are fixed, which means that you know what your interest rate will be like during the life of your loan. Variable rates are not fixed but rather changes over time, according to the prime rate. While a fixed rate is more dependable in terms of planning, but this rate tends to be a bit higher; on the other hand, you never know how a variable rate will increase or decrease over time, sometimes for the better and sometimes for the worse.

How to Use a Personal Loan for a Major Purchase – Solar Panel Loans

It will probably cost several thousand dollars to install solar panels, and it costs more or less depending on where you live. You will need to find a way to take out a loan for a more significant amount of money than an average personal loan. Taking out a personal loan for a major purchase is different in some ways from taking out a small loan.

Using Credit Cards for Major Purchases

Using a credit card for a major purchase is the same as taking out a loan. Credit cards are pieces of plastic that you can use to make purchases, and they are backed by banks. The banks earn their money off the transactions by charging various fees and interest rates. Credit card needs are very individualized, and they can even be a great way to build credit. You can charge some purchases with a credit card and then make monthly on time payments to build your credit rating. Lenders will look on you more favorably if you have a history of paying on time.

There are also zero interest credit cards that will allow you to make purchases and pay them back over a period of time with no interest. Normally the worst part of using a credit card for purchases is that they tend to charge higher interest rates than normal loans. You may be able to sign up for a special deal where the annual fee is waived and you have 9 to 12 months to pay off your purchase. The bad thing about that is that when the grace period is over you may be charged for the entire time you didn’t pay interest if you did not have the balance paid off in full.

How to Get a Personal Loan with a Low-Interest Rate

The downside to taking out a loan is that you will have to pay back not just the amount you borrow but the interest. Getting the best interest rate you can find will save you money and even help you pay your solar panel loans off faster. Borrowing money can be the right financial decision for you at the time, but you need to learn as much as you can about what kind of solar panel loans are available and what you are qualified for.

Make a Budget Before Borrowing

Before you actually take out your loan, make sure you have made out a budget that includes your monthly loan payment. You don’t want to make what seems like the right decision only to end up in trouble because you can’t pay back the money. Plan carefully so that you know how the money will fit into your budget and when you will pay off the loan.

What is a Low-Interest Personal Loan?

As discussed earlier, a personal loan is an unsecured loan that you take out and that you will have to pay interest on. Because you are going with a personal loan, you can spend the money any way you want without any input from the lender. Since the loan is unsecured, your interest rate and terms will be dependent on your credit score and income. You can use a low-interest personal loan to make a purchase or even consolidate loans with higher interest.

Qualifying for a Low-Interest Personal Loan

What to do to get a low interest personal loanEvery lender will have different requirements as to how to qualify for a low-interest loan. That is why it is better to shop around, even if you already have good credit. Generally, you will need to have good credit and enough steady income that the lender is reasonably able to believe that you will be able to pay back the loan. Different lenders may look at some factors more favorably, such as a long history paying credit card bills on time.

If you do not currently qualify for a low-interest loan, there are things you can do that will help your position. For instance, you can pay off some of your existing debt in order to change your debt to income ratio. You can also simply wait for several months and make sure you pay everything on time so that you can prove you are reliable. Getting a higher paying job or a second source of steady income will also help. If you have a friend or relative who wants to back you, you can better your chances by getting a co-signer. Your co-signer must have a good enough credit score and income level so that he or she would qualify for a low-interest personal loan.

Reasons to Use a Personal Loan

It seems like there are as many reasons to use a personal loan as there are people taking out personal loans. A personal loan can solve a lot of problems in a short amount of time, but many people don’t realize they can take out a loan for certain situations. They also might not understand how easy it can be to get the right personal loan for their circumstances. Here are some important reasons individuals take out personal loans:

  1. Losing your home is one of the worst disasters that can happen to you. Sometimes, though, one thing happens after another and you get an eviction notice on your door because you didn’t pay your rent. You can take out an emergency loan to pay rent so that you can catch up payments with your landlord and stay in your home.
  2. When people don’t have insurance, or if the insurance doesn’t pay out fast enough, you may need a loan for funeral expenses.
  3. If you have an accident and do not have an emergency fund in place, you may need a personal medical loan to help you get back on your feet.
  4. If you find yourself in a situation where you need a lawyer, for instance, if you are trying to receive disability compensation for a work-related incident or are seeking assistance with a divorce or child custody issue, and do not have enough money for representation, you could use a legal loan to cover your legal fees.

However, it is always important to remember one of the main rules of taking out any loan, which is that you shouldn’t take out a loan that you can’t reasonably payback.

Some of the Reasons the Solar Institute Gives for Going Solar

There are many good reasons why you should install solar panels. And if you are thinking about going solar, maybe these few reasons below will help you in your decision.

Lower Electric Bills

You might not be able to eliminate your energy bill entirely, but you can cut down on your monthly bills a lot. Your monthly energy bill is probably your biggest monthly expense besides your rent or mortgage payment, and saving money every month will add up to big savings down the road.

Increased Property Value

When you decide to sell your home, a property where the owner is already taking advantage of solar power will attract potential buyers. You will also be able to show off how much you’ve been saving every month on your energy bills. When you show your neighbors how much money you’re saving, they might follow your lead, raising the value of the homes in your neighborhood.

Save planet - go greenGoing Green

Solar energy doesn’t emit waste, so it’s better for the environment. Reducing your carbon footprint is just the right thing to do, and using solar energy helps you do that. You can feel confident every day that you are doing your part to help the environment.

Tax Incentives

Who doesn’t want to save money on taxes? If you are considering taking advantage of this tax incentive, called the Investment Tax Credit (ITC), then you should try to take advantage sooner rather than later. In 2020, you will be able to deduct up to 26% of the cost of your new solar panel system from your taxes, but by 2021, you will only be able to deduct up to 22%. From 2022 onwards, you will only be able to deduct up to 10% of the cost of your solar power system. This is still a great incentive, but to get the most bang for your buck, consider getting your solar panels as soon as possible.

Conclusion

Solar panels are good for the environment and good for your bank account, when you consider the savings from lower electric bills and possible tax incentives. If you cannot afford solar panels on your own, consider looking into solar panel loans. You can find solar panel loans online by online loan shopping for solar panel loans, or you can go to a bank to ask about solar panel loans. Before deciding which solar panel loans might be right for you, inform yourself of the different solar panel loan options.

Whatever you end up deciding, make sure you consider all of the solar panel loan options and compare all of the different rate options. Don’t forget that you will need to pay back solar panel loans, like other types of loans, so make sure that whatever solar panel loans you get, fit into your budget.

What Do Personal Loans Cost You: Interest, Fees and More

You may have some idea of what a loan is, but may not know much about the details. If you have never had the need for a personal loan, you may not know much more about personal loans other than you borrow money from a bank. If you are considering a personal loan, you may have a lot of questions. I plan to answer all of those for you in this article. I will address every aspect of a loan including personal loans cost, interest, and fees.

What Is A Personal Loan?

While it is important to understand personal loans cost, it is almost more important that you understand how a personal loan actually works. In the simplest description, a personal loan is when a lender allows you to borrow money. They attach a fee in the form of interest to the loan for allowing you to borrow the money. The lender can be a traditional bank, a credit union, or even a friend or family. You can also obtain a personal loan online. When the lender agrees to let you borrow their money, you are agreeing to repay the money. You agree to pay the money back by making regular payments for the term of the loan. The term is typically three to five years.

One key point I would like to make, and I will make it again, is just because you can obtain a loan does not mean you should. You should consider all of your options before applying for a loan. And you should make sure you understand the details of the loan agreement, including fees and interest. You should also make sure that you can afford those monthly payments. A loan is not free money. You have to pay it back and on time. I will discuss all of these points throughout this article.

Personal Loan Cost

If you are thinking about taking out a personal loan, you should know that you not only get money when you do that, but you also have to pay for that money. Sounds illogical? But that is the reality. So, you should be aware of how much the personal loan you get will actually cost you. This cost comes in different shapes and sizes such as fees, interest and more. So let’s get into all the important questions.

Do I Have To Pay Money To Get A Personal Loans?

In general, you do not have to pay money to get a loan. There is are personal loans cost associated with loans, however, rarely to you have to pay money to get money. At least, you should not be willing to give money to a lender to find out if you are eligible to get a loan. In most cases you want to obtain a loan because you do not have money to pay for something. It does not make much sense for you to pay money when you already are short on cash.

Some lenders do require you to pay an application fee to apply for a loan. I would recommend that you look for a loan that does not require you to pay this fee. There are many loans that do not have an application fee, so I am sure there is another lender that can meet your needs. Application fees can vary from $20 to $50 and are not refundable. That means that even if you are not approved for the loan, you will not get the application fee back. You must pay the fee before the lender will process your application.

What Fees Are Associated With A Personal Loan?

I mentioned above that there is a personal loans cost when you obtain a loan. The good news is for the most part is that the fees are added into your loan, so you do not have to pay it out of pocket. The bad news is if you need to borrow a set amount of money and you ask for that specific amount and then the lender takes money off the top. I can be a frustrating place to be. I will explain this in a little more detail and give you an example with numbers to make it easier to understand.

Each lender has some fee schedule for their loans. It is important for you that you read the fine print to understand the fees. A lender is legally bound to disclose all fees and penalties to you in writing. You should ask questions if you do not understand the agreement. There are a handful of fees you should expect from any lender. Loans have administrative fees that pay for the administration and paperwork processing of the loan. Administration fees may include an application fee. Some lenders tend to combine all of the various fees into one fee called the origination fee. This typically covers the application, running your credit, processing everything and paying out the money. The most important thing to remember is what I stated above, which is this fee comes out of your loan.

Let’s Look at an Example

Here is an example with numbers. This is just an example, these are not real numbers:

You apply and are approved for a loan of $5,000. The fees total $400. The amount deposited into your bank is $4,600. This is the amount you borrowed minus all fees. Keep in mind, you have to pay back $5,000. This can be a problem if you need the full $5,000. You should understand the fee schedule before you apply so you can ensure you borrow the right amount of money.

What Is Interest Rate?

When you borrow money, personal loans cost more than you realize. Lenders add interest to the loan as a fee for letting you borrow money. The interest the lender charges you is based on your credit score. The lower your credit score, the more risky you are to a lender and the higher your interest rate will be. Each lender gets to set their own interest rate, but there are many lenders available, so you do not have to take the first offer you find.

There are a few different types of interest rates of which you should be aware. There is a fixed rate loan, a variable rate loan, and a prime interest rate loan. A fixed interest rate loan means the interest rate remains the same throughout the loan. When you make payments in the early months, you are mostly paying the interest of the loan. Then, as you pay more of the loan, you start working on the principal. If you make any extra payments, that amount goes to the principal. This helps you pay off the loan faster.

Here is an example with numbers:

When you borrow $7,000 from a lender, the principal of the loan is $7,000. The lender adds the interest rate to that. It is a percentage, such as 10 percent, of the principal amount. A lender makes money from letting you borrow money by charging you interest. When you repay the loan, you are paying on both the principal and the interest. If you do not pay enough each month to pay the interest, then your debt will not go down.

A variable interest rate loan is exactly what is seems and it changes throughout the life of the loan. It changes based on the prime rate. The interest rate changes and then changes your payment amount. These loans are locked in for a set period of time. When that ends, the interest rate can change based upon the prime rate along with your payment amount. People tend to get into trouble with these types of loans because the interest rate can increase so much that the payment amount is no longer affordable. These loans are attractive because the interest rate starts lower than a fixed rate loan.

How Does My Credit Impact My Interest Rate?

Yes, as I stated above, your credit rate causes the lender to determine how risky it is to lend you money. Personal loans cost you money based on the percentage of your interest rate. They higher your interest rate means the more money you pay each month for your loan. When you have a low credit score, it can cost you more money in the long run.

When you have a credit score above 720, you are considered to have excellent credit. You can usually get a interest rate of anywhere from 10 percent to 12.5 percent. When your credit score is from 719 to 680, then you are considered to have good credit. That means your interest rate can go up between 13.5 percent to 15.5 percent. If you have average credit, your credit score falls between 640 to 679. When your credit is in this range, you can expect interest rates from 18 percent to 20 percent. Poor credit is when you have a credit score below 639 and then you find interest rates from 28.5 percent to 32 percent.

Now, let me show you in numbers how your interest impacts your monthly payment.

I will go back to the $7,000 you borrowed earlier. When you have excellent credit, your interest rate is 10 percent. That means you are borrowing $7,7000. If you repay the loan for 36 months, you pay $213.89 per month.

When you have average credit, your interest rate goes up to 20 percent. That means you pay $1,400 in interest, so the total amount you borrow is $8,400 and your monthly payment is $233.33. Your monthly payment goes up by $20. That may not seem like a large amount but when the dollar amounts are higher, the amount you pay per month is much more.

Are There Ways To Get A Lower Interest Rate?

There are a few ways that you may be able to get a lower interest rate when you are interested in a personal loan. If you can get a lower interest rate, you can lower the personal loans cost. You can get a co signer for your loan. This is a person that promises that you will pay the loan payments on time. If you do not make your payments, the co signer of the loan is responsible for making the payments. When you do not make payments and you have a co signer, not paying the loan can have negative impacts on your co signer’s credit.

You can decrease the amount of debt that you have, which will increase your credit score. You could also get a second job to increase your income, which lowers your debt to income ratio. If you get a second job, you are able to pay down your debt faster. When you are considering a personal loan, you should do loan shopping to find the best lender with the right rate for you.


Can I Improve My Credit?

Yes, you can improve your credit, but it take consistent work. It takes a long time to build up your credit, but it takes only a few missed or late payments to negatively impact your credit. Remember, that the lower your credit score means the higher interest rate that ultimately increases the personal loans cost. You should obtain a free copy of your credit report once a year. When you get your credit report, you should look at it for errors. If there is anything on it that is incorrect, you should have it fixed immediately. If you correct the errors on your credit report, it helps increase your credit score.

You should make every effort to pay all of your bills on time in the amount that is due. Late or missed payments are one of the top ways to cause a decrease in your credit score. When you make payments consistently on time, your credit score increases. You should also work hard to decrease the amount of debt that you have. If you are carrying too much debt, a lender will not approve to give you more debt. They do not want you to have a high debt to income ratio. They prefer it to be less than 30 percent. The best way to decrease your debt to income ratio is to increase your income or decrease your debt.

Are There Different Types Of Personal Loans?

There are different types of loans of which you should be aware. As a result, before you make a final decision on a loan, you should do some personal loan shopping. This helps you to ensure that you are getting the right loan for you. You should also take the personal loans cost into consideration when deciding on the right loan option for you. I mentioned above that you can get a loan from a traditional bank or online. You could also get a loan from a personal loan finance company. There are some things to consider when deciding between these options.

Traditional Lenders

A traditional lender gives you the ability to walk into a bank and have a person help you with your loan documents. If you want to have someone that is available in person to answer your questions, this is a better option for you. However, most traditional banks may not be as willing to work with you if you do not have perfect credit. However, you can have a conversation with a person to explain why you may have less than perfect credit. They may be able to offer you a lower interest rate.

Online Lenders

An online lender offers you convenience and flexibility. You can apply for a loan online from the comfort of your own home. And you can upload all needed documents in the same application. You often receive an answer in 24 hours and if approved, the money is in your bank account in about 24 hours after approval. An online lender may not have the lowest interest rate, but are more willing to lend money to those with bad credit. Here’s a list of credible lenders you should check out. You can even get offers from them in the next couple of minutes if you fill out this form below. If you get offers, you are not obligated to accept them, but it is a good way to see what are your options.

Other Not So Affordable Loan Types

There are a few other loan types of which you should be aware. They are loans from which you most likely want to stay away. There are some occasions when they work to your benefit, but I am not going to talk about that right now. They are payday loans and fast cash loans. These loans have really high interest rates. The loans are for low amounts and short periods of time. You typically have to repay the money in full in just a few weeks. In some cases all you need to provide is a pay stub to show how much money you earn per paycheck. The lender wants to directly access your bank account to take the money from your account on payday.

What Are Secured Loans?

In addition to being able to obtain different types of loans from different lenders, there are some different kinds of loans. The most common kinds of loans are secured and unsecured loans. Depending on which of the two kinds of loans you have it may make a difference in the personal loans cost.

A secured loan is a loan that has collateral associated with it. Collateral is anything of value that can be an asset to the lender. In the event that you miss a payment, the lender can take the collateral in place of your loan. Most of the time, a mortgage is a secured loan and your house is considered collateral. An auto loan is also a secured loan because the vehicle you are buying becomes the collateral. Having an asset attached to your loan typically gives lenders the incentive to provide you with a lower interest rate. The collateral gives the lender more security when providing you the loan.

Most personal loans are considered unsecured loans and do not require collateral. This is riskier for the lender and as a result has a higher interest rate. Most of the time the personal loans cost is higher on an unsecured loan.

Are There Alternatives To Obtaining A Personal Loan?

There are some alternatives to a traditional loan that you might want to consider before obtaining a loan. Keep in mind that while personal loans cost something, these alternatives may have a cost, also. Depending on how much money you need, you could consider using your credit card to pay the bill instead of getting a loan. This may be a better route for you to go if your credit card has 0 percent interest. If you pay off the full amount during the promotional period, you will pay less money than if you obtained a personal loan.

You could consider peer to peer (P2P) loan. These types of loans are found on P2P sites that offer crowd funding. This allows you to borrow money from people instead of institutions. Many of these sites are geared towards those who have less than great credit. You may also be able to find lower interest rates on these sites. Depending on why you need the loan, you could consider a government loan. If you need a loan for higher education, you could get a federally subsidized loan that has lower interest rates and more flexible policies.

Will A Budget Help Me?

A budget is always helpful. If you do not currently have a budget, then you should create one right away. There are many benefits to having a budget. In the most basic definition, a budget is the understanding of your income and balancing your expenses. A budget gives you an understanding of how much money you spend each month and in what categories. There are many different types of budgets. The easiest one is when you list all of your income in one column and then add all the numbers in the column together. In the next column, list out all of your expenses. Do not skip over any of your expenses. Remember to list them all. If you want to create a complete budget, you have to be honest about all of your expenses.

You subtract your total expenses from your income and hopefully you have a positive number. You know that personal loans cost you money each month. When you create a budget, you can assure yourself that you can afford to make that monthly payment. The number you have left is how much you can afford to pay each month for your loan. If you have a negative number, that means that you cannot afford a loan and you should not even consider a loan. The worst thing you can do for yourself is to obtain a loan if you cannot afford to make the monthly payments.

Should I Save Money?

If you have a negative number after creating a budget, that means you need to make some adjustments to your budget. Even if you do not have a negative number, you probably still need to make some adjustments to your spending. I have mentioned this throughout this article, but personal loans cost you money. As you are creating your budget, you should keep in mind that you need to take control of your spending and make cuts where needed.

I want to talk to you about spending cuts for a moment. I know, you do not want to cut any spending. The reality is you probably have to make some adjustments. There are few of us that have a large enough income to support all of our spending and saving. Many of us have to make tough choices when it comes to saving more money. Since we already know they are going to be tough choices, you have to decide what you really want. You have to decide if you want to save more money. You have to make the choices based on what you really want because when it gets hard, you need to remember why you are making the hard choice.

There are a couple of easy ways to begin saving money. The first is have money deposited directly into your savings account with each paycheck. This way it happens automatically and you never see the money. The money never goes into your checking account and it is easier to pretend you do not even have it. Next, you can cancel and remove all of those items that you do not use. Think about that gym membership that you are not using and cancel it. Remember,  personal loans cost you money. So, save some money now but cutting expenses and you may not even need to obtain a personal loan.

Conclusion

There are many other ways you can begin to save money. That is for another article on a different day. This article is about personal loans cost and how to reduce that cost to you. The best way I can think of is to not obtain a personal loan. Sometimes, we find ourselves in positions where we need a loan. That is ok. Do not beat yourself up for being in that position. Instead, educate yourself and find out all the information about the cost of personal loan so that you can make an informed decision. When you know as much information as possible, you can feel secure that you are making the best decision for yourself at this time.

What are the Different Types of Personal Loans?

If you are in a position where you are considering a personal loan, you probably have a lot of concerns. Being in a position to need a personal loan often brings about stress. It usually means that you need cash right away for some bills you cannot afford to pay. You may have some unexpected repair bill or medical procedures that bring about their own stress. On top of that, you do not have the money to pay for it. There is some good news for you. There are many options available to you. Many of which you may not be aware of. I will walk through all of your options including the many types of personal loans in this article.

What Is A Personal Loan?

If you are considering a personal loan, it is important that you fully understand a personal loan. It is important that you have a full working knowledge of personal loans so that you can make the best decision for your needs. The most basic description of a personal loan is when someone allows you to borrow a set amount of money. You agree to repay the money by making regular monthly payments. Typically, the lender is a bank, but it can be a credit union, online lender, and even family and friends. The lender charges you a fee to let you borrow the money. The fee is called interest. Your credit rate dictates your interest rate. The higher the interest rate means the more you pay per month to repay the loan.

There are many different types of personal loans. It is helpful for you to go personal loan shopping when considering a loan. This gives you information about all the loans that are available and helps you make the right choice. With so many lending options available to you, you do not have to take just any loan. You can and should make sure you have the right loan for you. If you have less than perfect credit, you may have less options.

However, there are still options available to you. It is important that you understand all of your options when it comes to a personal loan. You also need to make sure that you can afford to repay the loan. When you do not pay the loan back on time, it impacts your credit and potentially causes late fees which just adds to the amount you are already paying. You should take all of this into consideration when thinking about a personal loan.

Different Loan Types Explained

One aspect of personal loans that can be really confusing are all the types the lenders offer. When you are in a rush to find the money for financing anything in your life, you should probably stop for a second and think about this. Depending on which type of personal loan you choose, you will be faced with different conditions and obligations. So here is everything explained in detail.

Loan Types #1 – Traditional Loans

I mentioned that there are many different types of personal loans available to you. I want to highlight some of them for you. This way you can understand what is similar and what is different about all of them. This help you make the right decision. There is no such thing as having too much information. First, let us take a look at traditional lenders. When I talk about traditional lenders, I mean the banks that you know well. You may not love them, but I know you know them. They are the buildings that are brick and mortar. They are the banks that you can still walk into and there are tellers and loan officers to help you. Many of them do have online banking options, so you do not have to go into the bank. Many of these banks started out as neighborhood banks but have changed with the times and now offer more services online.

If you go into these banks to obtain a loan, someone is there to help you. Most likely, they will fill out the paperwork for you. These banks prefer to lend to those who have good credit. They are not the best at lending to those who have less than perfect credit. If they do lend to someone with bad credit, the interest rates are really high. They also may take a little longer to process your application and get the money to you, if approved. If you are approved for a loan with them, most likely they want you to open up a bank account with them, if you do not already have one.

Loan Types #2 – Online Lenders

Online lenders offer some of the other types of personal loans. There was a time when online lenders were for those with bad credit. They used to only offer loans with high interest rates. That is no longer the case. Online lenders are transforming the world of borrowing money. Now you can apply for a loan online in minutes. You are able to upload any documents directly from your computer to your application. It literally takes minutes to apply and submit all documentation. You receive a response in less than 24 hours. The money is in your bank account in about 24 hours from your approval. All of this happens in about two days. That is why many people are interested in an online lender.

For those with good or better credit, you can find online loans that offer you low interest rates. It is incredibly easy to research a personal loan online. With so much information available online, you can easily find all the information you need to make the best decisions about the right loan for you. The major downside to online lenders is being aware of which lenders you can trust. In our world of internet fraud and identity theft, you cannot be too careful. Do your research and find out what you can about any online lender in which you are interested. The information is available to you, you just have to look. This is not the time to get lazy. A quick search can give you tons of information about a lender. Be sure you know the lender is legitimate before you press submit.

If you’re interested in getting a personal loan online, you came to the right place. Fiona and Loanry bring you carefully selected reputable lenders.

Loan Types #3 – Fast Cash Loans

I know I probably sound like a broken record but there are many types of personal loans available to you. You should keep in mind, just because you can borrow money, does not mean you should. Just because you can borrow money from a certain lender does not mean you should do that, either. There are some loans with which you want to proceed with caution. Fast cash loans are those loans. They may come in the form of payday loans or title loans. Either way, they can be dangerous.

A title loan is when you use the title of your vehicle as collateral. These lenders do not typically check your credit. That may make them seem like a good idea for those with bad credit. However, they usually have high fees and interest rates. Also, keep in mind, you give them the title to your vehicle to hold until you repay them. Usually, you have to repay within a short period of time. The lender determines the value of your vehicle and does not allow you to borrow more than a certain percentage of that value. Just in case you missed it earlier, if you do not repay this loan, the lender can take your vehicle because you offered it as collateral.

Payday loans are another type of loan that gets you cash fast but move forward with caution. These loans are for small amounts and they have a ridiculously high interest rate. You must repay this loan on your next payday, hence the name. You give the lender a postdated check for the full amount of the loan. Yes, that is correct, you must pay back the loan in full on your next payday. The lender requires proof of your income so he can see how much money you earn with each paycheck. Also, the lender does not allow you to borrow more than your paycheck amount. The lender receives authorization from you to access the money in your account so they can receive their payment.

Loan Types #4 – Secured Loans

One of the other types of personal loans is a secured loan. A secured loan is often a mortgage or an automobile loan because they come with their own collateral built into the loan. However, there are some personal loans that are secured. That means that they have collateral attached to the loan. This is usually something expensive, that is worth more than the total loan amount. It can be a house, or car, or even jewelry or an expensive collectible. If the lender can prove the value of it, they may accept it as collateral.

Once you have offered something as collateral for a loan that means that if you default on, or do not pay, the loan, the lender can take your collateral in place of repayment for the loan. In the case of it being a house, the house is foreclosed on and you are kicked out of your house. If it is a car, the vehicle is repossessed. In short, you do not want to lose whatever it is that you used for collateral. Since these loans are secured with an item, the lender usually lets you borrow a higher amount of money than with an unsecured loan. These types of loans also have a lower interest rate because the lender feels more secure about them.

Another way you may be able to secure a loan is to have a cosigner. You may not be approved for the loan on your own, but if someone with good credit is your cosigner, the lender may agree. The cosigner is promising that you will repay the loan in full and on time. If you do not pay back the loan, the cosigner is responsible for your loan and must pay it. If the cosigner does not pay your loan, it will negatively impact his or her credit.

Loan Types #5 – Various Types Of Interest

When it comes to understanding the different types of personal loans, you should also understand the different types of interest. For personal loans, there are really two types of interest. There is fixed interest and variable interest. Fixed interest is just that, fixed. Whatever the interest amount is when you sign the loan papers, it is for the life of the loan. This means that your payments are the same each month and do not change. You always know how much you owe and there are not any surprises. The downside to a fixed interest is the interest amount is usually higher. Most people feel as though this is a price worth paying for the security of a fixed interest amount.

The other type of interest is a variable rate. This is different from the fixed rate because it changes. This rate is closely tied to the prime rate. All interest rates are based on the prime rate. Lenders use the prime rate as their base and then add however many percentage points they would like. With a fixed interest, you lock in when you sign on the dotted line. With a variable rate, you never lock in, unless the lender gives you a chance to at a later date. That usually does not happen with personal loans. That is more likely on a mortgage, but let us continue to focus on personal loans.

When the prime rate changes, so does your interest rate. Often the lender has a limit on how much it can fluctuate and how often. Even with those parameters in place, your loan payment changes. It may change in your favor and go down. But, it always goes back up again. These rates may be a little lower to start, but think carefully before pursuing this option.

Why Does My Credit Matter?

I know you do not want to hear it but your credit matters for most types of personal loans. What you really need to know about credit is this…a typical credit score is anywhere from 350 to 850. Most people have a credit score between 600 to 750. Good credit falls between 670 to 800. Anything below 570 is the danger zone of bad credit. When you have bad credit, it is much harder to get a good interest rate. You may find it is difficult to be approved for a loan, if you have bad credit. It is still possible to get a loan, but you have to work harder and do more research.

It takes a long time to build up your credit and only one or two missed payments to send it plummeting. Yes, that is correct. The number one cause of bad credit is late or missed payments. Creditors do not care why your payments were late. They only care that they were late. The number on your credit record does not tell the story. It does not give a full picture of you. Lenders pull your entire credit record to try to put together the pieces. They are not always successful. Sometimes, a lender wants to know your story and why you had moments of missed payments. Some of them listen to your reasons and consider them in determining if they should allow you to borrow money.

What Do I Do If I Have Bad Credit?

If you think you have bad credit, you should find out for sure. You need to pull your credit report and look at it. You cannot do anything to correct it until you know what it says. If you see any errors, you should correct them immediately. This can help improve your credit score. Once you have done that, you need to work on improving your credit score in other ways.

First, you should decrease your debt to income ratio. That means you need to start paying down your debt. You should work hard to decrease it as much as possible. You also need to make sure you make all of your payments on time and in the amount that is due. Even if you can only make the minimum payment at first, pay only that amount. It is more important to pay the minimum on time than to pay more late.

There are all types of personal loans, even a personal loan for bad credit. Your options may not be as plentiful as those who have great credit, but you still have options. You have to do some more legwork to find loans when you have bad credit. You have to do the research to determine who can offer you the best loan terms. Remember, just because a lender offers you a loan does not mean you should take it.

Why Should I Create A Budget?

Creating a budget is one of the smartest things you can do. If you are considering any of the types of personal loans, you should first make sure you can afford to repay the loan. There are many tools available online to help you create a budget for yourself. Most people do not like to even think about budgeting. They think it is some barbaric form of control. Well, I prefer to look at it as you taking control of your finances. It is you stepping into the driver seat and applying gas. You gain an understanding of how much money you earn and how much you spend. You see the items on which you spend money each money. It is in front of your face in black and white. You cannot argue with the numbers.

I am willing to bet you spend more money per month than you realize. I am also willing to bet that you are going to be shocked when you see exactly on what you spend money. You should not even consider a loan until you know you can afford one. The simplest way to do this is gather all receipts and information about where you are spending money. Write it all down and add it up. Then, you subtract that amount from how much money you bring home. Hopefully, that number is a positive number and you can see how much you can afford to repay in a loan. If that number is negative, you already have a problem and should no longer consider a loan.

How Do I Save Money?

So, let us say that number is negative. Now what? Well, first let us not consider any of the types of personal loans at the moment. We can put that to the side. Take a look at the items on which you spend money. Where you can make cuts? The first place to look is that gym membership that you do not use. If you have one and you do not go, you are not going to start going now. Cancel it. If you have any subscriptions that you are not using, cancel them immediately. You could save yourself a hundred dollars right there. That was easy, right? Let us keep going. It gets a little harder.

Now look at how often you eat out and cut that in half right away. If you can, cut it down to two times per week. That includes breakfast, lunch, dinner, and coffee. Yes, I said. Make your coffee at home and save a ton of money. Start preparing your own food. It is amazing how much money you can save. That is probably hundreds right there. Next look at how much money you are spending on groceries.

Start making a list before you go to the store and stick to it. Make sure you are purchasing sale items. Maybe you need to switch to a less expensive store. You can save a tremendous amount of money this way. Look at your cable and phone bill, can you make any changes there to decrease the amount of money you are spending? Call them and see what can of deal they can offer. You never know unless you ask. You should do that with all your regular bills and see how much you can save.

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

It is possible that once you create a budget and begin cutting costs, you determine that you are saving so much money that you do not need a loan. However, that may not be the case for you. Even after all the cost savings, you still have high credit card bills or some other unexpected cost that you just cannot afford right now. Before you look at the different types of personal loans, look at the budget you created earlier. Now that you have all these savings, add up your expenses again. Now, subtract them from how much you make. Hopefully, now you have a positive number. This number shows you how much you can afford to repay per month in a loan. You should not get a loan that requires you to repay more than that amount because you cannot afford it. If you cannot afford to repay the loan, your credit score suffers. You also bring a lot more stress to your life.

Are There Alternatives To Personal Loans?

There are other options besides all the various types of personal loans. Many of these options are not going to get you cash fast. You can get a part time job. This allows you to bring in extra money and you possibly will not need a loan. You can ask a family member or friend if you can borrow money from them. This is not a hit to your credit and most of the time, you do not have to pay interest. You can work hard and cutting costs in your budget and really make some changes that gives you a lot more money each month. While there are other options to obtaining one of the types of personal loans, they may not be the best options for you at this time.

Conclusion

It always comes down to you deciding what is right for you in this moment. If you already know that you cannot afford any of the types of personal loans, do not get a personal loan. If you know how much money you can afford to repay, then you can consider one of the types of personal loans. You have to do what is in your best interest. No one else can make that decision for you. You have to be in control of this decision. You are the one that is going to make the loan payments, so why would you let someone else decide for you? Do not put yourself in a worse financial position. Make the best decision you can with all of the information available.

What Happens If You Want to Return A Personal Loan?

If you are considering a personal loan, it may be a stressful time for you. I understand that the need for a personal loan comes up at varying times. It could be that you are in a good place financially and can afford to the monthly payments for a personal loan. There is another side to needing a personal loan. You could be in a place where you need money fast because you are in a sticky situation. You may have medical bills that you cannot afford. There may be some type of emergency that requires you to make significant repairs or a replacement.

No matter what your financial position is, when you are considering a personal loan, you should be sure that is the right path for you. You do not want to enter into a loan contract without serious consideration. It may be something that you cannot easily terminate. You may not be able to return a loan, but there are other ways you can handle a personal loan.

What Is A Personal Loan?

You are seriously considering a personal loan and one of your burning questions is what if I want to return it? That is a valid question and you should know the answer to it before making that decision. However, if you are asking that question, you probably have a few more questions. It is important that you fully understand everything as it relates to a personal loan. I am going to start with the most basic information.

A personal loan is when some type of lender allows you to borrow money. You promise the lender to repay the money when you make regular monthly payments for a set period of time. The set period of time can be anywhere from three to five years. A lender can be a bank, online lender, credit union and even a friend or family member. The lender adds interest to the money you borrow. This is a fee for allowing you to borrow money from them. This amount varies based on several factors, including credit score. The amount you pay per month is typically static and does not change from month to month.

A loan is a contract so it is important that you read the entire document, including the fine print. A lender is required to give you all the information about the loan before you sign the document. That does not mean that information is in print that you can easily read. Pay attention to everything before you sign it.

Can I Return a Personal Loan?

Typically when you accept a personal loan and the money has been deposited into your account there are no true givebacks. You can cancel the loan before you sign the paperwork and the fund are in your bank account. The one exception is a mortgage refinance, but that is not considered a personal loan. Depending on the lender, they may offer you a short period of time when you can return the loan. It depends on the lender and they do not have to offer it. You should ask your lender if they offer this period of time. While you may not be able to cancel the loan, you can always pay off the loan. There is a slight catch here.

You were in the amount of $5,000 with 10 percent interest. Most likely there were fees associated with your loan, so only $4,500 was deposited into your account. However, you owe $5,000 back to the lender. You also have to pay interest for the amount of time you had the money. In reality to pay off the loan right away, you have to pay money out of pocket.

Payday loans often have a two-day cooling-off period. You do not have to have a reason for canceling the loan. You have to give back the money. They do not charge you fees or interest. If you are in the UK and receiving money from a lender in the UK, they have a 14 day cooling-off period. You can cancel your loan within 14 days from the date the loan is signed. After that, you have 30 days to pay back the money. You may be charged interest for the days that you have the loan and there may be fees on top of that.

Can I Pay Off A Loan Early?

Yes, you can always pay off your personal loan early. I briefly touched on this above. However, there may be additional fees associated with paying off your loan early. You should make sure you read the fine print of any contract you sign. All lenders must disclose all the information about fees and interest about your loan in the contract. It is up to you to read and understand what is in the contract.

A lender may charge you an early termination fee. This is a charge from the lender when you pay back the money you borrowed earlier than the schedule. The lender makes money from your loan by charging you interest. They lose money when you pay off the loan early. They may charge a fee to offset the money they end up losing. Not all lenders charge this fee, so pay attention to the contract before you sign it.

There may be other fees that the lender charges you. One of those possible fees is an origination fee. It covers administrative costs that come with the loan. This is for the paperwork. This is usually taken off the top of the loan before it is deposited into your bank account. Some lenders charge application fees. This fee is charged by the lender simply for you to fill out the application. You may have to pay this out of pocket before the lender processes the loan. Even they deny your loan, you still have to pay the fee.

Are There Different Types Of Loans?

There are a variety of personal loan options available, so you should be able to find one that fits your needs. One of the major differences between loans is a secured or unsecured loan. Most personal loans are unsecured. That means that they do not have collateral associated with the loan. They are riskier for the lender and typically have a higher interest rate. A secure loan means there is collateral associated with it. Collateral is an expensive item, such as a house, car, or jewelry associated with the loan. If you do not pay back the loan, the lender gets to keep the item used as collateral.

In addition to the two major types of personal loans, there are also different kinds of loans. I mentioned earlier that there are many different types of lenders.  You can borrow from online lenders. In the past online lenders were considered for those with bad credit but that is no longer the case. Even those with excellent credit are getting loans from online lenders because it is faster. You quickly fill out an application and you receive an answer in about a day and the money is in your account just as quickly. Historically, they have had high-interest rates, but that is not the case today. It gives you another avenue to research when looking for a personal loan.

If you are interested to apply for a personal loan, You can check out Loanry and see what we can offer to you. We connect you with reputable lenders whom you can trust to honor the deal between you.

There are other types of loans but I would pursue them cautiously. They have high-interest rates, high fees, and can be dangerous. However, they can get you a small amount of cash quickly. You must pay back the money quickly as well. These are payday loans, fast cash loans, and title loans. Each one has different parameters. If you know that you can pay them back on time without any impact on your finances, then they may be the route for you. Just be aware that you should proceed with caution.

I’m Not Sure A Loan Is For Me

Obtaining a personal loan is something you should seriously consider before you sign the paperwork. It is understandable that you may not be sure if a loan is the right decision for you. You must make the right decision for you at this time. There are some items you should consider when deciding if a loan is right for you. The first thing you should decide is if you can afford to pay back the loan. If you cannot afford the monthly payments, you should not accept the loan. If you cannot afford the loan, you are putting yourself in a terrible financial position. You should also think about why you want the loan. If it is for something you need, you may want to move forward. However, if it is for something that you do not need, or frivolous, you may want to think twice about it.

If you are sure that you can afford the loan payments each month, then it may be a wise decision for you. When you use a personal loan properly, then it can help to improve your financial outlook. The key is to make the decision that does not hurt you financially. You have to be the one to make the decision for you. You cannot let others guide you to thinking if a loan is right or wrong for you.

What Happens If I Default On a Loan?

The last thing that you want to do is the default on a personal loan. When you default on a loan that means you have stopped paying the loan. Each lender has a different idea of what default means. For some lenders, one payment means that you are in default. Some lenders provide you a grace period of up to six months before they say you are in default. No matter what definition the lender uses, you still want to avoid default at all costs. Lenders make sure they get their money no matter what. They may incorporate the use of a collections company to come after you. They may choose to sue to get their money. If they decide to sue you, they take you to court and can garnish your wages. That is expensive for a lender because they have to pay court costs.

To avoid default, you should pay all of your bills on time. If you think you will not be able to pay them on time, you should contact your lender. In cases such as those, you should call them and tell them you are having financial difficulty. More often than not, the lender is willing to work with you in settling your bills. It really benefits them to work with you because you paying some of your bills is better than not paying the bill at all. If you can set up a payment plan, you can pay some of the bills.

Paying Interest Scares Me

It may be a bit extreme to be afraid of interest rates, but you certainly should not be a fan of them. Every personal loan has interest rates, which depend on your credit score. Interest rates are annoying but a necessary evil when it comes to personal loans. Interest rates can make a huge difference in your monthly payment. Before I get into the details of how interest rates impact your monthly payment, you should understand more about interest.

When you obtain a personal loan, you borrow a set amount. That is the principal amount. This is the amount to which the lender adds interest. Most lenders have a maximum amount they allow people to borrow. Lenders add interest on top of the principle. This is a percentage of your loan. This is usually a fixed rate that can be anywhere between 7 percent to 30 percent. Each loan has a term length. This is the amount of time you have to pay back the loan. It can be anywhere from 3 years to 5 years. Like the loan amount, the term length is fixed so you know how long you will pay back the loan.


Here is an example of the impact of interest shown in numbers:

Principle amount of your loan = $5,000

Interest rate with good credit = 10% = $500

Term length = 3 years (36 months)

$5,000 + $500 = $5,500 total loan amount = $152.78 per month


Another example with a higher interest rate:

Principle amount of your loan = $5,000

Interest rate with bad credit = 25% = $1,500

Term length = 3 years (36 months)

$5,000 + $1,500 = $6,500 total loan amount = $180.56 per month


What Happens During The Application Process?

No matter which type of lender you choose for your personal loan, you still have to fill out an application. You can do it in person or online. An online application is fast and easier. These applications typically have less questions. If you apply in person, a loan consultant most likely fills out the loan for you. You have to provide documentation once you fill out the loan. Lenders take a look at the documents you provide and look at some key information. There are interested in your income. They want to make sure you have regular income to pay back the loan. They also want to make sure that the amount of income you receive covers the loan amount.

Your credit score makes a huge impact on a lender’s decision to approve you for the loan. The lender pulls your credit report to see your credit history, employment history, and credit score. They also take a look at your current debt to income ratio. This is the amount of debt that you have and how it compares to the amount of income you have. A lender may decide that it is too risky to give you an unsecured personal loan. They may ask you to provide collateral. They may even ask if you could get a co-signer for your loan. This provides the lender more security when allowing you to borrow money.

What Documents Do I Need?

The documents are typically the same regardless if you get a personal loan online or through more traditional means. The lender expects you to provide the needed documents in a timely manner. It is in your best interest if you provide them as soon as possible. The first thing the lender wants to see if proof of identity. This is for your protection as much as it is for the lender. This document should have your picture and name on it. It could be a driver’s license, military ID, or passport. It must be a valid ID, so it cannot be expired. You need to provide proof of income. This document can be paystubs, W 2 forms, tax forms and documents, and bank statements.

The lender wants to know how much money you are spending on housing. This is a good way for them to determine if you are living above your means. They may ask to see proof of your rent or mortgage payment and your utility bills. They may ask for these documents and only give you two or three days to provide them. Lenders believe this information is easily accessible to you. They may also ask for proof of any retirement or annuity payouts you receive. You have the right to ask why they need the documents, but keep in mind, failure to provide them may mean you are denied.

What About My Credit?

Your credit score plays a big role in the personal loan decision. You may think your credit score is not a big deal, but it is. It is a huge deal in every aspect of your life. If you have bad credit, it can interfere with your ability to get a loan, a house, insurance, and even a job. You would be surprised how often others use your credit score to determine something about you. It may not be fair but that is often what happens. That is why you must work incredibly hard to not allow your credit score to slip.

Credit scores range from 300 to 850 points. The lower that number is, the worse your credit is considered. Anything above 700 is considered a good score. Anything below about 650 is starting to get into the fair to the bad range. Most people fall into the 600 to 750 range. The reason for most credit scores dropping is late or missed payments. It is hard to get and maintain a good credit score. It only takes one or two mistakes and your credit score decreases. If your credit score is low, you can bring it back up but it does take consistent and hard work. You should protect your credit score and do everything you can to not let it fall below what is considered good.

How Can I Repair My Credit?

I mentioned in the paragraph above, that is it possible to improve your credit score, but it takes consistent work. If you would like to obtain a personal loan with the best interest rate, you want to make sure your credit score is good or better. You should first pull your credit report and take a good look at it. If there are any errors or mistakes, you want to correct them immediately. That is a quick way to improve your credit score.

After that, you must make sure you are paying all of your bills timely. You cannot miss or make late payments. This causes your credit score to plummet. You can consider obtaining a personal loan to improve your credit score. Once of the best ways to improve your score is to make consistent payments on time. When you get a personal loan and make the regular monthly payments, you improve your credit score. While this may seem like an extreme way to improve your credit, it is a viable option if it makes sense for you to have a personal loan.

How Can A Budget Help Me?

Yes, a budget can absolutely help you with just about everything. There are many apps and websites available to you that make creating a budget easy and fast. Creating a budget puts you on the right track to being in control of your money. If you do not currently have one, once you finish reading this article, you must create it. The actual creation of a budget is fairly simple. You write all of your expenses in one column and add them together. Then, you list all of your income in a separate column and add that together. You subject the expenses from the income and hopefully, you have a positive number. If so, this is the money you can spend, providing you are already saving money. If you are not saving money, do that now. Save the money before it is considered income.

When you create a budget, you can determine if you can afford to repay a personal loan. If you have money left after you subtract your expenses from your income, this is how much you can afford to pay back each month for a loan. It can also help you decide if you should even pursue obtaining a loan. The numbers do not lie. If you cannot afford to repay a loan on paper, chances are you cannot repay in real life.

Conclusion

We have talked a lot about personal loans. You cannot technically return a personal loan. But you can repay them early. You can potentially give them back with some fees, but once that money hits your bank account, you are essentially stuck with your personal loan decision. There are many loan options available to you, including personal cash loans and online loans. They are fairly easy to obtain. Just because you can do not mean that you should. That does not change the fact that obtaining a personal loan is a serious decision. It is a decision you should give a lot of consideration. You should not enter into any contract lightly and certainly not one where you have to make payments.

An important thing to always remember is that you must make sure you can afford to repay the loan before you sign the paperwork. Put your budget in action and make sure that you have extra money at the end of the month to repay the loan. A loan is not free money. You have to pay it back. If you do not repay a loan, there are consequences that significantly impact your finances and your credit.

If I Get Approved for a Personal Loan, Do I Have To Accept It?

When financing everyday life becomes difficult, you start thinking about ways to help your situation. For many people, a personal loan would solve most of their problems. But, it is important to be well informed about the entire process. There is a path you have to take to get the money transfered to your account. And if you want to reach that end goal, you should know about all the steps. So this is why we are discussing some of the reasons you may need or want a personal loan, as well as can you decide not to take it if you start the process and see that it is not for you.

Why Would I Want A Personal Loan?

There are any number of reasons we look into personal cash loans. Yours may not be the same as mine. That’s why they’re called personal loans.

Consolidate Debt

One of the most common is to consolidate debt and lower your overall interest rate. If you have two or three credit cards with balances on them, a year of car payments left, and one or two other expenses you need to pay soon, a personal loan can pay off everyone else and lock in a lower rate than you were paying on most of your debt. Then, instead of juggling a dozen bills every month, you’ll have one.

Medical Bills

Sometimes the issue is medical expenses or unexpected repairs. These are the sorts of things which come out of nowhere and often leave us emotionally and financially drained as we try to figure out how to take care of those we love without losing everything we own. Depending on your circumstances, the right personal loan can help you pay off these unpleasant expenses and regain some control of the financial part of the situation.

Travel or Wedding

Not all expenses are bad, of course. You may be planning a family vacation or a wedding. These can be times of great joy and lasting memories, but that fun comes with a price tag. It’s up to you to weight the costs and the benefits. If you decide to move forward, a personal loan can make the experience more manageable than maxing your credit cards or bouncing a few checks.

We can’t always control what life throws our way, but we do have some choice in how we respond. Sometimes a personal loan can save you money by helping you manage your debt and retain some control over how you move forward.

Do I Have To Accept a Personal Loan Offer?

The short answer is no. Until you’ve signed, with ink on paper or electronically, everything you’ve negotiated is just that – negotiations. You’ve asked for a certain amount; the lender has offered you specific terms, including an interest rate based largely on your credit rating. But yes, you can walk away at any point before you’ve signed or otherwise officially agreed to the personal loan terms being offered.

Do I Pay Fees If I Don’t Accept the Loan?

Keep in mind that if you’ve agreed to any processing fees or other charges along the way, those may not be refundable. These aren’t meant to be secrets. Any reputable lender will be very clear and specific about set-up fees or other costs along the way. It’s up to you to pay attention and make sure you notice if and when they do. Remember, it’s not unreasonable for the lender to charge a small fee for their time and effort. Even if you decide not to go forward with your personal loan.

Will It Influence My Credit Report?

It’s also possible that a “hard inquiry” will show on your credit report even if you decide not to accept the personal loan. Lenders getting serious about you as a client will generally run a credit check on you, and this shows up in your credit history. Unlike “soft inquiries,” like the sort made by landlords deciding whether or not to rent you an apartment or a potential employer wondering if you’d be a reliable employee, “hard inquiries” impact your overall credit rating. One isolated inquiry won’t make or break your entire credit history, but repeated efforts to secure personal loans or other funding, especially if they don’t lead to actual borrowing and repayment, will ding your credit pretty good over time.

Reasons To Reject A Personal Loan Offer

The most obvious reason is that you’re not happy with the terms. And hey – this is the 21st century. This isn’t your father’s personal loan world with you, clean-shaven and nervous, wearing your best tie, sitting in a bank lobby waiting for some shiny youngster with a name like “Chad” or “Hunter” to allow you to beg while they look professionally distant and pretend to consult their supervisor just to let you sweat.

You’re the customer. Whatever your credit score, you have the right to hold out for decent terms and attentive service from any lender you’d consider doing business with. You may not get everything you want, particularly if your credit report needs some work, but lenders can and will compete for your business. If you’re working, or have some other source of reliable income, and you can pull together a few basic supporting documents to show you’re who you think you are, you should be able to get a personal loan you’ll be happy with.

If not, there’s no crime in walking away. Be polite and professional; you never know when you’ll need this lender and these people keep notes on everything. You don’t have to buy a computer just because you enter an electronics store and you don’t have to take home a new outfit just because you walk around the mall. Similarly, you don’t have to take out a personal loan just because you did some shopping.

That said, there are times people walk away from loan offers which aren’t driven by capitalist gumption. At the risk of horrifying or offending you, please allow me to address a few less-justifiable reasons to walk away from a loan offer.

You Weren’t Prepared

The lender needs information you don’t have and suddenly it all seems like too much trouble. This isn’t a problem with the loan process; this is Adulting 101. If you’re going to apply for a loan, you should recognize in advance that you might be asked for proof of income, verification of identity, or other personal information. You’re asking someone you’ve never met to transfer thousands of dollars your way. Is it so crazy they’d like to have a reasonable idea of who you are and how to get ahold of you if anything goes wrong?

You’re Not Sure How Much You Need

This is a preparation problem as well, but far more basic. Why are you borrowing to begin with? If it’s a bill consolidation loan, what are your total debts at the moment? If it’s for a vacation, a wedding, or a remodeling project, where’s your budget and estimates? Borrowing should be far less starched and joyless than it was a generation ago, but it’s still a big step with serious long-term repercussions. Put on your big-person panties and do the math ahead of time, friend.

You’re Not Sure How You’ll Pay It Back

This is the same issue from another angle. Adulting. Preparation. Math. Grown-up life isn’t all pizza delivery and wandering around the house in your underwear. I mean, you can do that if you like, but the flip side involves being responsible and thinking things through and all that other stuff that’s not very rock’n’roll, but is pretty much essential if you want to avoid moving back into your mom’s basement when you’re 40.

Not that there’s anything wrong with that… we just want it to be a choice, and not because we refused to use a calculator.

If it sounds like I’m scolding anyone, that’s not my goal. Believe me, whatever poor choices you may have made here and there along the way, I’ve made worse ones, and more often. I’d like to help you make fewer of them, especially when many of them are so avoidable. Getting this deep into the loan process before you realize you’re not sure whether or not you’re ready to take out a loan is avoidable.

What Should I Consider Before Applying For A Personal Loan?

That’s a great question. We’ve already covered three – how much do you actually need, what documentation should you should have available, and how much can you realistically afford to pay back monthly? I probably sounded a little snippy about those before, so I won’t belabor them here. Please know, however, that I’m just trying to look out for you because I’ve been there.

OK, I lied – but just a little bit. I’ll belabor documentation, the most boring part of the process.

See, I’m the guy that feels perpetually blindsided when asked what year I got married or when we moved to such-and-such place. I know where I’ve worked over the years, but I have to look up starting and ending dates and salaries and contact information every freaking time. It’s embarrassing. Take an hour and gather some pay stubs, work history information, etc. Don’t panic if you’re asked for something you don’t have in front of you, and don’t be surprised if you’re not asked for half of what you’ve prepared. But what harm can it do to have that sort of thing compiled in some easy-to-reference way just in case?

Here are a few other things to ask yourself before going personal loan shopping:

What’s Your Credit Score?

This is easy to check, and it should give you a much better idea of what sort of interest rate and other terms you should be able to secure. The two most popular credit score models are FICO and VantageScore.

If your FICO score is below 580 or a VantageScore below 500, it’s going to be difficult for you to get credit, even on unfavorable terms. It might not be impossible, but expect to encounter low limits and high interest. Do what you gotta do, but you should be prioritizing improving your credit rating as soon as reasonably possible so that you have more options next time.

FICO Score Factors

If you FICO is between 580 – 670 or your Vantage lands somewhere between 500 – 660, you’re going to face some challenges, but a personal loan isn’t out of the question. While you should always check with your local bank or credit union, you’ll definitely want to explore a personal loan online. Online lenders generally have greater flexibility and are often willing to take greater risks. The tradeoff, of course, is that you’ll probably pay more in interest and fees than you’d like. That doesn’t mean you should resign yourself to the first offer made; you should still shop around for the best personal loan terms available to you right now.

A FICO above 670 or a VantageScore above 660 means you can afford to be a bit more selective. Anything above about 750 on either scale and chances are you’re already set for financing for just about anything that might come up. That doesn’t mean a life without problems (oh that it were that easy!); it just means more options when it’s time to deal with those problems.

And that ain’t nuthin’.

By the way, a personal loan can actually help to improve your credit score. You probably don’t want to take out a loan solely to bump your credit rating up a few points, but since you’re borrowing anyway, keep in mind that making your payments on time and otherwise staying in good standing with the lender means that six months from now, your credit report will look better than it does now. By the  you pay off the loan, it will be even better.

There are other factors, of course, but responsible use of personal loans is one important step in moving from ‘poor’ credit to ‘good’, or from ‘good’ to ‘excellent.’

What Are Some Different Types of Personal Loans?

Obviously there are dozens of possible reasons for taking out a personal loan. Presumably you’ve encountered one or more of these since you’re looking into it to begin with. There are specialized loans for many common situations in which people might need to borrow and which you should definitely consider if your circumstances suggest it. We need to get over our fear of asking questions about personal loans. We’re the consumer. It’s our right to understand what we’re getting into. Period.

Education Loans

Before taking out a personal loan to pay for anything related to post-secondary education, fill out the FAFSA and talk to a financial aid specialist at whatever institution you’re hoping to attend. Federal, state, and private aid is available for all sorts of things other than traditional four-year degrees. You may not qualify for all of it, but you might. You should at least look into it before borrowing on your own.

Vehicle Loans

Every car, truck, motorcycle, boat, and airplane dealership has their own preferred network of lenders. Don’t assume they’re the best way to go, but sometimes they are. Depending on how desperate the dealer is to move product, you may find Zero Interest offers or other unbelievable terms which make it worth your while to finance through them rather than with a personal loan or other financing you arrange on your own. Always read the small print and pay attention to the details, but consider all options before signing one of them.

Medical Loans

In recent years, several companies have begun issuing medical credit cards which allow you to pay off unexpected medical expenses over longer time periods. The interest rates vary widely (some are rather high), and not all medical providers accept them, but it wouldn’t hurt to explore a few options. As with anything, read the small print and don’t be afraid to ask questions. If they’re legit, they’ll answer as many of them as you have.

Whatever you want to use your personal loan for, make sure you find a credible lender. What if we tell you we can find offers for your right now? Loanry is a service that finds real, personalized offers for you, made by reputable lenders. By providing the required information in the form below, you allow us to match you with an offer of a lender with whom you actually may get a loan.

What Other Varieties of Personal Loans Are There?

It’s not all about purpose. There are several types of personal loans you should be aware of before you commit.

Unsecured and Secured

Most personal loans are unsecured. That means you’re not putting up specific collateral as guarantee for the loan. If you default on the loan, the lender will most likely turn you over to a collection agency and it’s all downhill from there, but they don’t automatically get your car, your house, etc. There are secured personal loans, but whatever you put up for collateral could potentially be seized if you fall behind on your payments.

Fixed and Adjustable Interest

Most personal loans are fixed interest. That means whatever interest rate you agree to when you sign off on the loan is the interest rate for the life of the loan. The obvious advantage to this is the stability. Every month, your repayment amount is probably going to be exactly the same, no matter what else is going on in the financial world at large. People do sometimes secure personal loans with adjustable interest. This means the interest rate is tied to national rates. It may rise and fall over the life of the loan. This might save you money over time. Or it can cost you substantially more than you anticipated when you took out the loan.

The other “type” of personal loan to consider is the source of the loan. As I said before, you should absolutely check out your local bank or credit union. Sometimes they offer great terms – especially those of you lucky enough to belong to a particularly good credit union.

Some of you have family members who may offer to loan you money at a lower interest rate than any financial institution can match. It’s impossible to generalize about these sorts of personal loans because they’re so, well… personal. The only suggestion I’d make regarding loans from family or friends is that you write up a specific agreement. Include interest and repayment terms, sign it, and do everything in your power to make those payments consistently – every time.

You know your family dynamics. You know your circle of friends. If your gut tells you it’s a bad idea, then it’s probably a bad idea. If you feel good about it, then go for it – but don’t drop the ball on this one. Your credit report matters, but there are things that matter more.

Finally, don’t neglect the amazing range of online lenders available to you in the 21st century, however. Obviously you don’t want to pick one at random; the internet is still the “Wild West” in some ways. But one of the services we provide, and on which we pride ourselves the most, is our ability to connect you with reputable online lenders after gathering some basic information about what you’re looking for and what you need. Don’t be afraid of finding a personal loan online, especially if you think the terms are better for you.

We don’t loan money ourselves – we’re about the education and the connections. They want your business; you want a personal loan. Obviously we hope it works out, but if you decide to go another direction, we’re still happy because you’ve been presented with more options and made the choice that seems best to you.

Not to get all sentimental about it, but we get all warm and toasty about that kind of thing here. It’s fulfilling.

For you it can mean a much more convenient loan experience. The turnaround time tends to be much shorter than with conventional institutions. And you don’t have to clean up or put on a tie to apply. Honestly, you could do it in your PJs while sipping coffee out of your Spongebob mug.

Then again, I don’t general like to make important personal decisions in my PJs. Maybe you should go ahead and shower and put on real clothes first. But you can still have your coffee and fill out your info at your own desk or from your favorite recliner instead of browsing old golf magazines in the bank lobby – so that’s pretty cool.

What Should I Ask If They Offer Me A Personal Loan?

Some of the most important questions come before you begin applying, but several only occur once you’ve been offered a loan. You may be understandably relieved or excited and just want to get things finalized so you can move on, but there are a few things you should double-check before committing yourself to even the best-sounding offer.

What Fees, Charges, or Penalties Are There?

Reputable lenders will usually be upfront with any fees or other costs wrapped into the loan process, but it’s still a good idea to make sure you’re absolutely clear on what you’re being charged, and for what purpose. Just as important, you should ask them to specifically identify the section of the agreement that addresses late payments or other unexpected difficulties. None of us plan on being late, and you may worry that you’ll sound like you’re planning on blowing them off if you ask about it first thing, but stuff happens – and it’s important to know how they handle such things.

Some lenders have a grace period built in around due dates. Or some other policy indicating they’re not looking to penalize you too greatly for a late payment here or there. Others, though, have substantial penalties written into the contract language. Being a few weeks late a few times a year might add to your balance substantially. Or it can  trigger an interest rate increase, or any number of other things. Make sure you know what those are.


Is There A Penalty for Early or Over-Payments?

It sounds crazy, doesn’t it? The idea that you might be penalized for making your payment too early? Or for paying extra? Or even paying off the loan ahead of schedule?

Different lenders treat these things in very different ways. Keep in mind that while of course they want you to pay back the amount they loaned you, their profit comes from the interest you’re paying on top of the amount of the initial personal loan. That means they make more when you take the full term of the contract to repay the loan. And while they’d never put it this way, they’re not always all broken up if you’re late a few times along the way as long as you keep paying, because those late fees and additional interest are more money for them.

You can’t blame them. They’re not evil for wanting to make a profit on your loan. Restaurants are hoping your order alcohol or desert for the same reasons – they make more that way. As long as everyone’s honest about the terms and expectations and follows through on what they’ve promised, that’s just capitalism in action. They want you to pay the loan off successfully; they’re just not in the same hurry you are to get there.

Who Do I Contact With Questions?

Most personal loans have repayment terms of a couple of years or more. We don’t know what might come up during that time. Or what questions you might have for your lender along the way. I like to clarify up front the best way to reach my lender. And also how quickly I can reasonably expect a response. It’s not a guarantee of anything. But how they handle this question at the beginning of the process is often a pretty big hint how they’ll handle any effort I make to reach someone there a year from now.

Norman Vincent Peale quote

Alright. You’re set. Where you go from here is up to you. I’m sure you’ll make the best decision you can for your specific circumstances. In the end, that’s all any of us can do.

Let us know if we can help.