Loan

Aug 22 2017

Personal Loan Basics and Where to Get Them #interest #rates

#best personal loan
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Personal Loan Basics and Where to Get Them

I have received quite a few emails asking about personal loans.  Some of the questions have been about how I feel about them and others have been about the basics of personal loans.  While I believe that their might be better options than procuring a personal loan. I do realize that many might be in need of a loan for whatever reason.  That being said, I decided to put together a little guide about personal loans and where to get them.  Hopefully this will help those that are looking into personal loans for a money option.

Check out our recommended personal loan lenders. These are reputable companies offering loans up to $35,000 with quick approval.

Personal Loan Basics

Personal loans are simply just loans.  You can use them for a wide range of reasons and most get them when they are in an emergency.  If someone doesn t have a nice emergency fund and doesn t carry a credit card, then they would need to find money from somewhere.  This is why people seek out personal loans.  These loans tend to come in two different forms, which are secured and unsecured.

  • Secured Personal Loans A secured loan is one that you would get, but only if you put up come collateral.  This would mean that you wouldn t get the money until you put up an asset of yours.  Typical collateral come in the forms of your home or car.  If you don t repay the loan, then you could lose your home or car.  Secured personal loans usually offer lower interest rates, but that comes with a cost.
  • Unsecured Personal Loans This is similar to a credit card.  You don t have to put up any collateral, but you usually will pay a higher interest rate.  Typically called a signature loan because they really only require your signature.  They are simple and easy to get, but will cost you more in the long run.

*Important*

When you are searching for a loan lender, make sure to ask them about their interest rates.  They will likely ask to pull your credit report, but try to get them to provide you with a range.  If you ask too many lenders about the interest rate you can get, then you will have multiple inquiries on your credit report.  That is not a good thing.  Once you find a lender that has the terms you can agree with, then have them pull your credit report and score.  I use and recommend Credit Sesame as a way to learn more about your credit score.  You are able to get your free credit report annually from annualcreditreport.com.  You can also get one from each of the 3 credit bureaus each year.

Where to Get a Personal Loan

Besides picking what type of loan you want to get (with the majority picking unsecured) and what amount, you will need to figure out where to get you loan.  There are quite a few places to secure a loan, but choosing is completely up to you.  It is a personal decision (pun intended ;)).  Here is a run down of where you can get a personal loan .

  • Bank or Credit Union One of the first places you should try to get a loan from is your bank or credit union.  They tend to know you much better than any other organization and they have a better view into your finances.  That part can be good or bad depending on your financial situation.  Banks and credit unions tend to be more restrictive on the loans that they give out, especially since the market crash in 2008.  Their decision will be based on the risk they perceive you are.  It is recommended that you try out your bank first, then look around at other local banks to see what type of loan terms they provide.  I am a fan and use Alliant Credit Union .
  • Online Loan Lenders The online personal loan space has blown up over the years.  The reason for this is because they are able to provide a service that people are looking for and their approval processes are not as strict as banks.  There are many online loan lenders out there, so you can easily shop around for a good rate.  Many will give you instant approval based on your financial profile, but that is not always the case.  You will need to make sure you understand the terms upfront before you sign anything.  Two examples of online loans lenders are Avant and PersonalLoans.com.  All companies have different terms and conditions along with which places they can offer loans, so this should be considered when shopping around.  You can also check out OneMain Financial  or NetCredit for reputable personal loans.  You can also view our recommended personal loan lenders .
  • Peer-to-Peer Lending This form of personal loans is the hottest rage right now.  If you haven t heard about this before, then let me give you a little background.  People are going online more and more to find other people to loan them money.  In order to make the process more legitimate, some sites created a marketplace for loans.  Lending Club and Prosper are the two biggest players in the P2P loan market.  You can go to one of these sites, enter your information and then find out what grader you are.  The loans have an origination fee of around 2% to 4% and your interest rate will be based on a number of factors.  Other people will lend you money and you will pay them back through the platform.  This is a relatively new way of lending and some states don t allow it, so check the terms.
  • Payday There is a reason why I put this option last.  I am not fond of payday loans and the reason is that I think they are predatory.  Most of these places charge you annual interest rates upwards of 3,000%.  Yes, you see that number correct.  I would almost never recommend a payday loan, but I realize that many people still use them.  If you need a loan, then check out the other options first.  You will almost always pay less.  If you have no credit, no bank account, and only deal in cash, then a payday loan might work for you.  You have about a million options because these places are everywhere.  A payday loan should only be your absolute last resort to get money.

Personal Loan Advice

Make sure to take some time to read all of the terms and conditions.  Each lender will have different terms and you need to understand them.  You don t want your hard earned money being squandered away with huge interest payments or penalties.  With the power of the internet, you can easily compare the different loan lenders and pick the one that works best for you.  Don t jump into a loan quickly and before you have time to do the appropriate research.   You will be better off in the end.

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