Understanding Personal Loan Interest Rates

Are you drowning in credit card debt? Do you want to finance a personal purchase? Do you need help covering your late bills? All of these reasons and more are reasons that some individuals choose a personal loan. And, while it may seem like the answer to your problems, it is essential that you understand how personal loan interest rates work.

By understanding personal loan interest rates, you can decide if a personal loan is really what you are looking for. In some cases, it is possible to just wait to purchase the item that you planned to purchase with the personal loan. In other cases, the loan is still very much needed, but the individual is able to make a smarter financial decision, based upon the new knowledge that they have gained. This is the purpose of this article – to help you make a smart and educated financial decision about obtaining a personal loan.

How are Personal Loans Different From Other Loans

While not always the case, in many cases, personal loans are unsecured. They can be obtained from credit unions, banks, and financial institutions. They are extended to individuals with good credit as well as bad credit. This wide range of uses, options, and stipulations can often make it difficult to distinguish a set interest rate on personal loans. However, there are a few things that we can determine before applying for a personal loan.

Secured vs. Unsecured

In a secured personal loan, you will have to place something of value up for collateral. This can include items like your home or your car. Generally, this is not required in a personal loan. It is, however, an option with some lenders.

In a secured loan, you are likely to have a lower interest rate. This is because your lender is assuming a lower risk. Higher risks always mean higher interest rates. So, taking out an unsecured personal loan means that you will have to pay a higher interest rate, in most cases.

Comparing Lenders

Personal loan lenders can be found online, at banks, at credit unions, at payday loan institutions, and through peer-to-peer lenders. Each type of lender will offer a different interest rate. Credit unions and banks often offer a fair interest rate to individuals with good credit. However, those with bad credit are likely to be rejected for a personal loan through a bank or credit union.

In a payday loan, you are almost guaranteed approval. Many payday lenders don’t even check your credit information. Instead, they check things like employment history, bank history, and personal references. This means that, as long as you meet income requirements, you can probably get approved. However, you will pay a hefty interest rate for a payday loan. In fact, they are generally the highest interest rate lenders around.

Peer-to-peer lending has recently gained a substantial amount of popularity, and for good reason. In regards to personal loans, they offer some of the most favorable interest rates around. This is because, instead of one lender, you have several. Risk is minimized, allowing you to reap the benefits in the form of a lower interest rate. However, you should be aware that you will have to provide information about why you want the loan and what it will be used for. This is not usually the case with other types of personal loans.

Comparing Your Interest Rates

Once you determine the type of lender you want to use, it is essential that you take the time to compare interest rates. You will find that, even though you are shopping the same type of lender, interest rates will vary from one lender to the next. This can mean extra savings – or spending if you’re not careful – for you.

Be careful that you look at more than just the actual interest rate. Look at other parts of the term that will determine how the interest rate affects your overall repayment of the loan. This can include things like the number of months you have to pay on the loan as well as the number of payments you make each month. You should also look very carefully for lenders that charge prepayment penalties. These types of lenders are very popular when it comes to personal loans.

A Warning to Buyers

Once you see just how much the loan will cost you, carefully consider whether or not you really need the loan at all. If so, come up with a repayment plan. Often, a personal loan can become a financial trap that is not much different than credit cards. This is especially true when you use a personal loan for luxury expenses or to pay bills on a regular basis. You may find that, by evaluating your budget, you can save for that trip or home theatre system. Or, you may be able to borrow the money you need for your bills from a family member or friend, at no interest. While this may not always be an option, it is definitely worth looking into before you commit to paying back money to a lender, especially if you have a high interest rate ahead of you.

Understanding Instant Approval Personal Loans

If you have ever applied for a loan, you know just how nerve-wracking it can be. It sometimes even seems like the lender purposely draws on your nervousness. While this probably isn’t true, the fact is that there is so much anxiety that revolves around applying for a loan at a bank or credit union.

Technology, however, has made it possible for you to apply for a loan, right from the comfort of your own home. While this type of loan may not be right for everyone, many people are finding happiness and less anxiety in instant approval loans.

Remember, Safety First

Since you are applying for a loan online, you will be providing personal information. Be careful. While there are plenty of reliable lenders online, there are scams and identity thieves tucked away. They often know how to look enough like a reputable company to fool you, unless you take the time to look a little harder. Even if you are excited about a great deal or rate, remember to investigate a little further. This can save you from becoming a victim of identity theft.

Investigating scams is not as hard as it seems. First, follow the general rule that, if it sounds too good to be true, it probably is. Next, be wary of any lender that requests any kind of upfront deposits or advances. Because many conventional lenders ask for upfront deposits or advances, people rarely think anything of it when an online lender requests the same. Scam artists have used this to their advantage. Before sending any money, find out why you will need the deposit. Ask the business their trade name and search for them on the Better Business Bureau.

Avoid any lenders that request any kind of pre-payment or application fees. Conventional lenders will not ever ask you to make a pre-payment. Any application fees should also be rolled into the actual loan. Additionally, avoid any lender that requests cash for collateral. Lenders that require collateral will request personal property for collateral, like your home or your car.

Avoid Applying Too Often

One of the most common mistakes borrowers make is applying for too many loans at once. What they don’t realize is that, with each inquiry on their credit report, their credit score drops. This, of course, makes it more difficult to actually get approved for a loan. Generally, any more than three credit inquiries on your credit report in a twelve month time span will affect your credit negatively. Try to limit your loan applications to only one or two a year. This, of course, can be hard if you are denied for two loans in a row and you need funds. If this happens, try to seek out other sources for the funds you need until you can get your credit score where it needs to be so that you can avoid any further damage to your credit report.

Payday Loans

Another type of lender you should watch out for is the payday lender. This is especially true if you happen to have good credit. Payday loans generally have extremely high interest rates for very little money. This is because this type of loan is designed to target individuals with very bad credit.

Payday loans do not generally base their decision on your credit. By not checking your credit, they are assuming a higher risk. This is why they charge such high interest rates. They are also likely to request your bank information. This is how they receive payment, in the event that you fail to make your payment on time. You can usually spot these lenders pretty easily. While completely legitimate, they are probably not the type of instant approval loan you are looking for.

Advantages of Instant Approval Loans

Obviously, the biggest advantage of an instant approval loan is that you know whether or not you are approved for your loan within just moments. You can apply for the loan, at your leisure, at any time of day, right from the comfort of your own home. This is extremely valuable to some individuals.

Another advantage is that you have an almost limitless number of options when it comes to lenders. You can shop around almost anywhere in the country. You are not confined to the rates, terms, and conditions of your local lenders. Instead, you can search for the lender that best fits your needs.

Disadvantages of Instant Approval Loans

Besides the potential of scams, there are other disadvantages of instant approval loans. Some of them, however, can be prevented. One of the easiest disadvantages to prevent is agreeing to terms that might not be in your best interest. Before committing to any terms, carefully review the terms outlined in the company’s website.

You are also likely to find that instant approval loans do not always have the best rates. You may find that, by waiting a few days, you could save substantially on the amount of interest you are being charged. This can sometimes account for thousands of dollars, depending on the interest rate and repayment schedule.

Understanding Government Personal Loans

Government personal loans can be used for a variety of reasons. They are also offered to a variety of individuals. And, while there are definitely many benefits to using government personal loans to handle your current financial need, there are also some disadvantages that you should be aware of.

Educating yourself on the different types of loans, government and non-government can help you decide which type of loan is best for you. You should consider your future as well as your present. By taking this type of approach, you can minimize the chance that the type of loan you choose ends up being a mistake.

Consider the pros and cons. Consider your plans for the future as well as any road blocks that may come up along the way. Most of all, understand how each type of loan works in regards to approval, repayment, interest, and terms.

Types of Personal Government Loans

It is important that you apply for the right type of government loan. This will help you avoid the frustration of getting denied because you applied for the wrong loan. It will also save you from having to start the process completely over and waiting longer for a loan decision.

A disaster relief loan can be applied for by both individuals and farmers. For family farmers, this can be especially important. In most cases, their only source of income is their farm. If a natural disaster occurs and wipes out their home, crop, or both, it can very quickly mean financial ruin as well. Unlike individuals, farmers cannot just continue working after a natural disaster like most individuals. This is exactly what makes the disaster relief loan so valuable. There are specific guidelines that farmers must meet, including at least a 30 percent loss in crop yield. However, if granted, the loan can help replenish livestock or crops. It can also be used to pay for the repair or rebuilding of buildings, homes, or other structures.

Renters and homeowners that do not own a farm may also apply for a disaster relief loan if they experience a loss during a natural disaster. For homeowners, the loan is designed to cover any cost that is not covered by insurance and can be used to repair or rebuild the home to its original state. It cannot, however, be used to make upgrades to the home, unless the upgrades can prevent damage from future disasters. Renters and homeowners can also apply for a government disaster loan to replace personal property lost in a natural disaster. This type of loan, however, cannot be used to replace real estate or luxury items.

Educational Loans

A wide variety of educational loans are offered through the government. There are programs that will allow you to perform research in exchange for government education assistance. There are consolidation loans for individuals that have already completed their schooling. There are subsidized and unsubsidized government loans. The information on these loans is too extensive to cover in this current article so it is suggested that you take the time to research each one individually.

Housing Loans

The government also offers a wide variety of loans for potential and hopeful homeowners. There are basic FHA home loans, which are targeted towards first time homeowners. There are loans designed for individuals that are at risk of losing their home to foreclosure, otherwise known as “Hope for Homeowners.” There are home loans for Indian families. There are loans designed specifically for purchasing a manufactured home. Once again, the number of loans offered would take a great deal of time. If you need a home loan, it is suggested that you take the time to carefully review each of the home loans offered through the government to decide if there is one right for your specific needs.

Veteran Loans

Veterans are extended very low interest loans through the government. Veterans can apply for refinancing home loans, home loans, and life insurance loans. A refinancing loan can be used to help refinance the home of any veteran, whether the home is currently a veteran loan or not. Regular home loans can be used to apply for a home loan. Veterans can sometimes qualify for these loans with zero money down. Life insurance loans allow veterans to borrow against their existing life insurance policies with the VA.

Advantages and Disadvantages to Government Loans

There are many advantages to applying for a government loan. The main advantage is that government loans are often offered at a much lower interest rate than conventional bank loans. Approval is also often easier with government loans, which means that some individuals with not-so-perfect credit may qualify.

The main disadvantage is that the government has more venues to use to gain repayment if you fail to make your payments on time. They can withhold your income taxes and can often get ruling in their favor for garnishing your wages. Consider very carefully before applying for a government loan whether or not you will be able to make your payments on time.

How to Find Low Rate Personal Loans

It doesn’t really matter why you need a personal loan or what your credit it is, finding the lowest personal loan rate can save you tremendous amounts of money. However, there are some steps that you have to take to ensure that this happens. This, of course, takes a great deal of time and effort. But, if you are persistent and work hard, the money you save will make you glad that you made the effort.

Make Lenders Compete

Comparison shopping is smart shopping. Visit as many lenders as you can. Check online, at banks, and at credit unions. Let lenders know, right off the bat, that you are comparison shopping. While you don’t want to disclose specific rates or amounts to your lender, you can let them know when they provide you with terms that are less favorable than another lender. You might be surprised at how quickly lenders are willing to bend over backwards to try and accommodate you so that they can gain your business.

Don’t Fall for the Old Switcheroo

Finding the lowest interest rate isn’t always the best approach when it comes to personal loans. Sometimes, lenders will offer you a lower interest rate but will place terms in the fine print that increase their earnings. This can include prepayment penalties, monthly fees, administrative fees, and more. Check the fine print of all types of loans carefully. Check for additional fees that the lender doesn’t mention. Question anything that you don’t understand. All of these tips will help you avoid falling for the old switcheroo.

Don’t Limit Your Options

Many individuals limit their lenders to just local banks and credit unions. And, while providing your local businesses with business is always a good thing, it can sometimes really pay off to check around. The digital world has made it possible for individuals to find lenders all over the country, many of which might be able to offer you a better rate and better terms than what you can find locally.

You may also want to consider what is known as peer-to-peer lending. This type of lending often provides a lower interest rate because the risk is much lower. This is because, instead of one bank or lender, you have several lenders that pitch in to meet your financial requests. This type of lending is not very well known but it is definitely an option that provides one of the most favorable interest rates when it comes to personal loans.

Before you can apply for a peer-to-peer loan, however, there are certain requirements that you must meet. One of the most important things that you will need is a detailed account of how you plan to use the money. This includes more than just the spending but also why you need the money. This can include any number of reasons but it is important that you try to be honest. This will help to develop your creditability.

You should also be aware that you will still have to meet other lending qualifications, like a favorable credit score and adequate income. Having this information on hand when applying for the loan can help make the process go much easier.

All in all, you are likely to find that a peer-to-peer loan is easier to qualify for, even if you are required to provide more information. Just be sure that, if you choose to go this route, you are protected. Contact a professional financial advisor before getting a loan online. Doing so can help you avoid identity theft or internet fraud.

Don’t Get Discouraged

Even if you find that getting qualified for a low interest personal loan is difficult, remember that there is a lender out there for almost every borrower. If it is a lack of collateral, try increasing your income slightly by taking a part-time job. If it is your credit, consider checking into poor credit lenders. There is almost always a solution to the barrier that you are facing in getting a low interest personal loan. And, if not, then consider a conventional loan, if your financial need is serious.

Avoid Damage to Your Credit

Each time you visit a lender, your credit score will drop. This, however, can sometimes be avoided. Try obtaining a copy of your credit report on your own. Take this credit report to every lender you apply at. If you are applying online, send it via email or fax. While the lender may still want to pull your credit before finalizing the loan terms, your copy may be enough to provide you with a pretty clear picture of what your loan terms will look like. This will help protect your credit score from multiple hits while you do your lender comparisons.

Bad Credit Personal Loans Guaranteed Approval

Bad credit personal loans that offer guaranteed approval really seem too good to be true? How can these companies really guarantee approval? Are there any restrictions or stipulations placed on this guaranteed approval that you need to be aware of? Are there any disadvantages of bad credit guaranteed approval loans that you need to be aware of? We will explore these questions and more so that you can better understand how bad credit personal loans with guaranteed approval are right for you.

How Does the Loan Work?

There are actually a variety of bad credit guaranteed approval loans. Many of the bad credit guaranteed approval loans are considered “pay day loans.” However, there are other types of bad credit guaranteed approval loans that you may qualify for. Understanding the differences can be extremely important if you need a loan for more than just a short term cash advance.

In pay day loans, you are allotted a specific amount of money. There is generally a limit to this amount of money and it is usually based upon your income level. Some pay day loans will allow you to use collateral if you need a larger amount of cash but your re-payment to the loan company cannot exceed your income level. Re-payment is scheduled around your pay schedule. You must either pay the full loan amount or renew the loan and repay the interest. This is often a frustrating cycle for some people.

Other types of bad credit guaranteed approval loans are likely to have a lending limit as well. However, your limit is generally much higher because repayment holds a closer resemblance to that of a conventional loan. You have a set and predetermined amount of money, which includes a portion of your interest as well as a portion of the loan. The repayment schedule can vary, depending on the lender used. You may or may not have to use collateral for this type of loan.

How Does Guaranteed Approval Work?

Bad credit loans with guaranteed approval are not exactly guaranteed. They are, however, much easier to qualify for. You must meet certain requirements, which include a minimum amount of income, income stability, and reliable references. You do not have to have great credit, however.

Bad credit loans with guaranteed approval allow you to have credit blemishes. They may pull your credit report. However, your credit report will not hold as much weight in a bad credit guaranteed approval loan as it would in a conventional loan. Even individuals who have judgments, collections, and previous bankruptcies may qualify for these loans. There are a few restrictions that you need to be aware of though.

If you have a bankruptcy that is still being processed, you will probably not quality for a bad credit guaranteed approval loan. Bankruptcies that are not currently in default are still open for new additions so the denial of your loan application is less about your credit and more about protecting the company. If, however, your bankruptcy is in default, it is unlikely to have an impact on your loan application approval.

Advantages to Bad Credit Guaranteed Approval Loans

For some individuals, a stained credit history can make it impossible to receive approval for a conventional loan. However, there are situations in life in which a loan may desperately be needed. Since the approval criteria are much easier to meet, even an individual with credit problems may be able to get the funds they need. This can enable you to purchase a car, purchase a home, start a small business, pay overdue bills, and more. There is rarely a limitation on what you can use the money for. However, it is important that you check to be sure that there are no limitations on purchases made before applying for the loan.

Disadvantages to Bad Credit Guaranteed Approval Loans

Getting approved for the cash you need sure can feel great. However, there are definitely some disadvantages that you need to be aware of when considering a bad credit guaranteed approval loan. Doing so can help you avoid making a serious mistake.

Interest rates for bad credit guaranteed approval loans are generally much higher than conventional loans. This can be especially true of pay day loans. When you are simply paying the interest, the lender is making money on the amount they loaned you. However, the interest rates are often so high that many borrowers can only afford the interest. This can lead to a vicious cycle that can last for months, even years.

Guaranteed approval loans are rarely reported to the credit bureau, unless you fail to make your payments. This means that you will not receive any credit benefits from your bad credit loan. This can be a little frustrating for some individuals, particularly if they are trying to improve their credit rating.

Advantages and Disadvantages of No Collateral Personal Loans

When looking at loan options, there are two basic types – secured and unsecured. In a secured loan, you are required to offer some sort of collateral. Collateral is something that the lender can take possession of, should you fail to make your loan payments on time. Generally, collateral must be something that is worth a substantial amount of money. Some examples include a house or a car.

Sadly, there are some cases in which you may need a loan but have no collateral to offer. This can be because your valuable assets are already offered as collateral in a different loan or because you don’t own any items that can be used for collateral. This would require you to look for a no collateral loan, otherwise known as an unsecured loan.

There are both advantages and disadvantages to an unsecured loan. By understanding them, you can determine if this type of loan is right for you. It can also help you to know what you should expect from these types of loans before you sign on the dotted line.

Advantages to Unsecured Loans

Probably the biggest advantage to an unsecured loan is that you don’t need any type of collateral. This means that renters, homeowners, car owners, and non-car owners can all have an opportunity to receive loan funds. After all, not everyone has collateral to offer. Or, you may own an item that you could place for collateral, but you are still paying on it and don’t want an additional loan. Whatever your reason for wanting a no collateral loan, you won’t have to worry about any additional risk to your home or car when taking out a loan or being denied because you don’t own these items.

Another notable advantage to no collateral loans is that they are much faster to process. In some cases, you may even be able to get an instant approval. Because there is no deed or title to process or evaluate, processing time is very short. This can be especially true if you are borrowing a small amount of money. In most cases, a credit report, employment history verification, bank account verification, and reference verification is all that is needed. In some cases, you may be able to receive funds the very next business day.

Disadvantages of No Collateral Loans

Sadly, however, this is where the advantages of unsecured loans stop. There are many disadvantages of unsecured loans, particularly for individuals with bad credit. While it may be tempting to look at just the advantages, the disadvantages are an important part of making a smart loan decision.

In most cases, unsecured loans are directed towards individuals that only need to borrow a small amount of money. Without collateral, lenders are rarely willing to take a very big risk. More money, of course, means more risk. If you need to borrow a substantial amount of money, you may want to reconsider your loan plan. The higher risk affects more than just your loan amount, however.

Higher risk always means higher interest. Unsecured, no collateral loans are no different. Without collateral, your lender is basing their lending decision solely on trust and credit history. This can make unsecured loans almost scary for individuals with bad credit. While you may get approved with bad credit, you are likely to receive an interest rate that is substantially higher than you might have anticipated. Carefully consider whether you really need the loan now. If so, consider obtaining a co-signer or going for a secured loan to help reduce the interest rate that you would have to pay on your own with an unsecured personal loan.

Another disadvantage that many individuals are not aware of is that unsecured loans are often less flexible than secured loans. You are likely to find that you must pay a specific amount each month for a specific number of years. If you later decide that you want to pay more or can pay off the loan sooner, you are likely to experience serious prepayment penalties. This can sometimes cancel out any savings you have made from paying the loan off early.

To avoid getting blindsided by extra fees, like prepayment fees, carefully read the contract before you sign. This can help you understand what your terms are and any additional fees that you may face. Making the decision for the type of loan to take out can be a difficult process. However, for some, there are very few options. Be sure that you look at both sides of the coin, no matter how limited your options may seem. In the end, only you can make the right choice for your current and future financial needs.