In some cases, personal loans may be worth considering to help with a financial bind.
Here’s what you need to know before requesting a personal loan.
What are some details about personal loans?
To qualify for personal loans, it helps to have a stable income and good credit. You can still qualify with less-than-perfect credit, but the better your credit, the better your chances of approval.
You can use the money for a variety of reasons:
- debt refinancing,
- a vacation,
- a wedding,
- car repairs,
- small business expenses,
- home improvements.
What are the advantages and disadvantages of personal loans?
The advantages of personal loans are many.
Personal loans may be unsecured, which means you don’t need any collateral to get one.
They can have fixed terms and interest rates, so when you take out a personal loan, you’ll know the terms clearly.
A disadvantage is that because they’re so appealing and easy to get if you have great credit, they might encourage you to borrow unnecessarily—to buy things you don’t need or to live beyond your means instead of saving up for a major expense.
And personal loans have origination fees that get subtracted from the amount you borrow. Take that into consideration when choosing your loan amount and calculating your total borrowing cost.
They can also have late fees and prepayment penalties, and some personal lenders have minimums that may be more than you want to borrow.
How can I get a personal loan?
Many companies and lenders offer personal loans. It’s just a matter of looking for a lender that offers you the rate and terms you are comfortable with.
You can get a personal loan from a bank or from a peer-to-peer lender. Online lenders also offer personal loans, as do credit unions.
Getting one is just a matter of submitting a request and seeing if you can get approved.
As with most financial products, there isn’t a single best personal loan product on the market.
Each lender has its own criteria for approving loans, its own fees and terms, and its own rates for people with different credit scores and incomes.
Disclaimer: This is not legal or financial advice. Please consult a legal or financial advisor for your specific situation.