Personal loans can be very useful for consolidating debt, paying for a vacation, or taking care of other unexpected expenses; however, it can be tricky to get personal loans for bad credit. The majority of personal loans are signature loans, which means that they are backed up by your signature and your promise to pay them back. If you have bad credit, a signature on a contract is often not enough for a bank to lend you money. Use these three tips to help you get a personal loan with bad credit.
1. Try to find any collateral you may be able to use to get a personal loan. Collateral is something that the bank can seize in the event that you do not pay on your personal loan. Some people use a car or house, since there tends to be lots of value in those. However, it’s wise to use something with less value; if you can’t pay on your loan, you don’t want to also lose your car or house! Many people use jewelry, musical instruments, or electronics as collateral for loans. Remember that the amount of the loan you can get then depends on the current value of the collateral.
2. Be willing to accept a higher interest rate. Having bad credit has its consequences, and being charged a higher interest rate is one of them. Work with your banker and ask about other personal loan options that involve a higher interest rate; you’ll have to pay more over time, but it’s often the only way to get personal loans for bad credit. Additionally, bring in lots of documentation that proves your income and assets; it may help you get approved.
3. If you have family members that trust you and are willing to help you out financially, consider asking one of them to co-sign your loan. Having a co-signer with good credit and verifiable income is one of the best ways to get personal loans for bad credit. Ensure that the person you ask is comfortable with being listed on the loan, since they are held just as accountable for loan payments as you are.
Personal loans are an excellent way of using credit to consolidate high-interest debt, pay for an unexpected bill or expense, or cover the gap between pay periods. Going to your bank and getting a personal loan can seem like a daunting task, so follow these three steps to get the loan you need.
1. Make an appointment at your bank or credit union and gather the paperwork you need for your loan officer. At a minimum, you’ll probably need pay stubs from the last two months as well as bank statements. The bank simply wants to ensure that you have enough money coming in to support your current debts and a payment for your personal loan. You may also want to pull a free copy of your credit report; the bank will pull your credit report to determine whether or not they can give you a loan. Pulling your credit report ahead of time gives you a chance to fix any inaccuracies and ensure that everything on the report is true.
2. Determine how much money you need and how much of a monthly payment you can afford. Your bank most likely has a payment calculator that can use the loan amount and interest rate to determine how much you will have to pay every month for your personal loans. You don’t want to have too much of a monthly payment, so crunch the numbers and determine what you can comfortably pay. You may need to adjust this amount later if your credit report puts you in a higher interest rate group.
3. Go to your appointment with the loan officer, ensuring that you have all of your income paperwork. You should also bring several forms of identification and a reference list. Some banks do require personal references to ensure your trustworthiness. All you have to do then is let your loan officer run your information through the system and determine whether or not you qualify for their personal loans. Having the paperwork and information they need helps them speed the process along and get you the money you need.
The uncertain changes in the money market have encouraged many consumers seeking personal loans for fair credit to consider all options for comparison to determine the most efficient option. Securing a personal loan with minimal long term financial impact, manageable payments and low interest can become a challenge. Securing a competitive personal loan for fair credit requires obtaining quotes based on current credit score information. Popular resources to obtain a personal for consumers with fair credit include participating banking institutes and 3rd party lender networks. Determining the best option may require applying to both alternatives to determine the best approval interest rate and and monthly rate.
Securing a personal loan for fair credit requires obtaining information to include a current credit report and an awareness of expendable income. The margin for fair credit is based on an average of all credit scores to include credit worthy scores and damaged credit. Creditors consider fair credit based on the national average, previous payment history and the applicant’s income. Determining the amount of expendable income requires a detailed review of monthly expenses, generated income and recurring payments. Issuing creditors are able to provide a quote and approval based on these factors.
Major Bank Lenders
Many consumers apply for a personal loan for fair credit with a familiar major banking institute. Personal loan rates based on credit scores or the national credit labels to include great, fair, and bad are often displayed with an estimate approved percentage interest rate for all customers. Applying for a personal loan with a bank often provides assurance to the custom er requiring the loan due to the insurance of funds and availability. Consumers are able to receive the decision for applicable loan rates within minutes by applying through the online loan portal of their issuing bank or speaking with a knowledgeable loan representative. The approved interest rate amount is determined by the applicant’s credit score, payment history, and income.
3rd Party Lenders
The internet has provided a fantastic platform of information and lending options for many consumers considering approval for personal loans for fair credit. Internet brokerage sites provide a comparison chart of rates, monthly payments, and interest rates based on an application provided through the issuing site. The brokerage site is able to provide various loan options based on the applicable information, which is submitted to various lending institutes with variable rates.
Those who have sought personal loans for bad credit likely know how difficult the process can sometimes be. The economic downturn of recent years has made the process even more arduous for those with imperfect credit histories. Record levels of unemployment, unanticipated layoffs, corporate restructuring, and drastic drops in property values have all posed substantial obstacles for those whose credit records include one or more blemishes. However, personal lending is slowly rebounding, and options exist even for those lacking perfect credit scores.
The last few months have seen a decline in personal loan interest rates, making this type of lending more attractive to a wide range of borrowers. In addition, the Federal Reserve issued revised 4th quarter 2010 figures, indicating growth in the amount of personal loan debt following several subsequent periods of decline. Thus, while obtaining a personal loan is more difficult for those with credit problems than for those with stellar ratings, the prospects for doing so have improved and finding personal loans for bad credit is indeed possible.
It will come as no surprise that personal loans for bad credit are generally accompanied by significantly higher interest rates than other types of financing. This is simply because the lender must account for the greater risk of default often presented by such borrowers. However, by offering an asset such as a home as collateral, even those with spotty credit histories can find lenders willing to offer less onerous loan terms. Secured personal loans can be a great option for those needing a quick infusion of emergency cash.
Unsecured personal loans for bad credit typically come with higher interest rates and frequently require automatic bank withdrawals for the payment of each installment. Specific loan terms, including the length of the loan, prepayment penalties, and the frequently substantial fees assessed on this type of product will vary from lender to lender. Because of their high cost and potentially difficult repayment terms, anyone considering this type of loan should take their complete financial situation into consideration, in order to assess all options for meeting current financial demands. However, as has been an undeniably common reality in recent years, unexpected events and circumstances can create an immediate need for personal liquidity, making these types of loans a valuable resource in difficult times.
Credit Unions and national banking institutes are influencing consumer intrigue by offering the best personal loans and flexible repayment options. Loans are gaining become more available and gaining in popularity, as consumers in the US have taken out an additional $5 billion in credit from December 2010 to January of this year. Banks are providing lower fixed interest rates, repayment alternatives and incentive programs to encourage utilization of available funds.
Many banks offering the best personal loan rates also offer additional incredible incentives to current banking members. Members are able to take advantage of interest rate plans, bonus points or vacation options provided exclusively by the issuing banking institute. CitiBank is one such example of a financial institute that gives you rewards along with your personal loan. Should you be approved for a loan from them you may also establish a checking account with them. This checking account can be enrolled in their current “ThankYou Rewards” program which gives you points for every dollar you spend. Typically, these rewards programs offer as much as 1% cash back. Other banks, such as Chase, also often offer cash for opening a new checking account with them. In March of 2011 they were offering $125. While this may not seem like a lot, something is better than nothing!
In addition to rewards, some companies, such as Discount Advances are even offering referral programs, where you can get paid for referring your friends and family to their services.
Large banks or credit unions often offer fixed interest rate options to current members as an incentive to secure a loan. You should visit with a knowledg eable bank re pres entative to determine the current interest rate and find out about any available incentives or rewards programs to secure the best personal loan.
Issuing bank institutes offering the best personal loan rates to their members often provide alternative repayment options. Some loans now offer an option for direct debit, sometimes refereed to as automatic loan repayment. You may be accustomed to receiving your paycheck via a direct deposit. Some loans now offer an option for direct debit. This is where the back will automatically deduct your monthly payment from your account on the date that you specify. This is something your bank prefers, as they are ensured to receive their payment in a timely manner. You should enjoy it as well, as it eliminates the fees associated with a late or missing payment should you forget to send that check. Just be sure that you have enough funds in the account! It might be wise to schedule the direct debit on the same day of your direct deposit to insure maximum funds are available.
In addition to automatic loan repayment, your credit union or bank might also offer the option to report the timely payments to the credit bureaus to enhance the member’s credit score.
Consumers with bad credit considering an unsecured personal loans are urged to consider the advantages and disadvantages in the long run. Unsecured personal loans are often viewed as an ideal option for quick cash during an emergency. Unsecured personal loans are often distributed with an escalated interest rate, no collateral, and a revolving credit option. Unsecured loan interest rates often exceed 10 percent, escalating the loaned amount, causing many consumers to create a debt simply from obtaining the unsecured personal loan. The changes in the economy, unemployment rates and escalating costs of living have caused an increase of interest in this option. Comparing interest rates, discussing fee schedules and determining the exact amount needed is a great way to turn the cons of an unsecured loan into a pro for personal credit scores.
Comparing Interest Rates
The interest rates for unsecured personal loans vary by fund providers. Consumers are able to obtain an unsecured personal loan through a private bank, third party lending agency, or online loan broker. Obtaining a personal loan will always require an application, proof of income, and identity verification to process the request. It is encouraged to request a quote of interest from a private bank and third party lending agency when considering personal loan alternatives. Many online brokers offer the option of filling out an application for quote comparisons. The consumer is able to adjust the amount required, date of payment and fee options based on the online broker’s adjustable application.
The payments and fees associated with an unsecured personal loan vary based on the issuing institute. Unsecured personal loans are issued without collateral or money down. The issuing institute may issue fees in addition to the loan payments to recover interest, administrative support and transaction bank costs. It is encouraged to review the fees associated with the overall loan amount to conserve costs and discuss potential fee schedules if repayment is unfeasible.
Limiting the Loan Amount
It is pivotal to limit the overall loan amount required to secure a competitive interest rate, manageable payments and security of credit. Consumers are encouraged to review the purpose and general needs of the loan before completing an application. Unsecured personal loans are reported to the governing credit bureaus based on the repayment. Limiting the amount to match the project, emergency or financial circumstance will influence a manageable payment option.
Unsecured personal loans are transactions in which funds are advanced to a borrower who has not pledged any tangible property or assets as security for the loan. Such loans do not, therefore, place the borrower in danger of losing things such as homes or cars in the event they fail to repay the amount due. Because the lender lacks security for the money they have advanced, this type of loan has traditionally been available primarily to borrowers with outstanding credit histories. However, particularly in the aftermath of the recent financial meltdown, lenders of all types have recognized the market for unsecured personal loans available to those with imperfect or even seriously damaged credit.
The economic downturn of the past several years has harmed the financial condition and credit ratings of many. Often, the damage to an individual’s credit occured as a result of circumstances beyond their control, including job losses and unexpected illnesses. However, even when fortunes take a turn for the worse, the financial necessities of life remain. Home and auto repairs, education expenses, medical bills and other obligations do not simply disappear in times of economic misfortune. Indeed, those hardest hit by the economic crisis are the people least likely to have asssets available for use as loan collateral. In such cases, unsecured personal loans may be the answer.
Bad credit borrowers considering unsecured personal loans must weight the costs and benefits of initiating such transactions. Despite recent interest rate declines in an overall sense, any unsecured personal loan product is almost certain to have a very high interest rate attached. Substantial fees and penalties may also accompany this type of transaction, as they are among the only incentives lenders have to justify the risk they incur by making this kind of loan. However, it is possible to comparison shop for the most advantageous unsecured personal loan terms, and find lenders willing to waive prepayment penalties and who will also report prompt payment history to credit reporting agencies. The latter loan feature will help the borrower begin climbing the credit score ladder once again. Anyone with damaged credit who is considering an unsecured personal loan must carefully examine their own circumstances and shop for the best loan product to meet their unique needs.
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Can everyone get unsecured personal loans? They are available to most people if you have very good credit. To be considered for these types of loans will require a fairly high credit score. The higher your credit score the better it looks to credit unions and banks that make these types of loans. High credit scores indicate to some extent that you are less of a risk for a loan than those people with lower ratings. You might be interested to learn about the types, features and benefits of unsecured personal loans.
The two most common types of unsecured loans are cash advance loans and unsecured personal loans. Either type of loan works equally well to provide quick cash to consumers. There is a difference when comparing the two types. As mentioned earlier good credit is required for unsecured loans, whereas a cash advance is not based upon your credit history or credit rating and a co-signer is generally not required. However, to make up for this lack of documentation and verification these loans are often given with short terms and come with very high finance fees.
If you want to pursue an unsecured personal loan, you might be interested in a couple of these beneficial features. Several of these types of loans will not come with a prepayment penalty, which can be an important loan feature. Most have lower rates in comparison to credit cards. Another nice feature is they offer a fixed rate and this is for the entire period of the loan. Many people find this aspect highly appealing in comparison to adjustable rate personal loans. An adjustable rate personal loan adjusts to rate adjustments with decreasing or increasing monthly payment amounts. This can make monthly payments difficult to handle when the economy skyrockets your payments. The nice thing about unsecured personal loans is that for the most part you can use the money for just about anything you want. They may be used for home improvement loans, bill consolidation or paying off small debts.
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Wondering how personal loan rates are determined? Tired of dealing with high interest rates every time you apply for a loan, or scared to even apply in the first place? Before you can qualify for lower interest rates, it’s important to know why personal loan rates vary. A variety of factors influence personal loan rates, including credit, employment history, and the general mood of the lender that day.
Your credit influences personal loan rates
You probably already know that your credit affects the rate you might be offered when you apply for a personal loan. When a lender checks your credit report, he or she looks at a few different things. Your FICO score is usually the most important part of your credit report, but that’s not the only thing that matters. Generally, if your FICO score is below 600, your odds of getting a loan with a low interest rate are slim to nothing. However, if your FICO score is low, but all of the debts listed on your credit report are several years old, you still have a chance of being offered an interest rate that isn’t too high.
Your employment history influences personal loan rates
After lenders check your credit report, the next thing they look for is stable employment history. If you hop from job to job, your chances of getting a low interest rate are not very good. On the other hand, if you have been employed at the same company for an extended time, this can benefit you. If your credit score isn’t that great, but you’ve been at the same job for several years, many lenders will view you as less of a threat.
The mood of your lender influences personal loan rates
Many people don’t realize that loan approvals and interest rate amounts are not based on criteria that is set in stone. Lenders have heard every sob story imaginable about why your credit score is low or your employment history is unstable. Want to gain your lender’s trust and respect? Tell them the truth. If your FICO score is bad because you partied too hard in college, let them know. Explain that who you were then is not who you are now. If you had an illness that caused you to fall behind on bills, bring documentation. When meeting with a potential lender, dress appropriately. Pretend you are on a job interview if you aren’t sure what to wear. Arriving for an appointment freshly showered and dressed to impress can increase your chances of receiving a low personal loan interest rate.