Many consumers request for loans every year. For most borrowers, the main reason for taking out a loan is to keep up with bills. Another reason for applying for loans is to cater for emergency situations when they do not have adequate money in savings. While personal loans can be a perfect option for borrowers who do not want to exhaust their credit cards, it is important that you first get more information on the type of loan you want to request for before committing yourself to a loan. Here is a guide to help you request for the best unsecured personal loans, unsecured loans to meet your financial needs.
Personal loans are a type of unsecured loans to help borrowers meet their short-term needs. The loans are characterized by a fast approval rate and with many direct lenders available both online and in-store, it is always possible to choose from a lender with affordable rates and convenient terms. Borrowers are not restricted on how to use a personal loan, which means that you can use the loan for different purposes including home renovation, payment of bills, car repairs, emergency expenses, debt consolidation among other reasons. Using the loan for debt consolidation can be the best option if you want to pay off multitude of debts with different repayment terms to remain with a single loan with affordable rates.
Personal loans are unsecured in nature, which means that you do not have to issue any of your assets as security for the loan. The loan can be the best alternative for individuals who need instant funding but do not have a high valued item to issue as collateral. However, this nature of personal loans tends to attract a relatively higher interest rate compared to other loan types. The maximum loan amount varies depending on the lender. But since unsecured personal loans, unsecured loans are meant for short-term use, most lenders will issue a loan amount of between $50 and $100,000. The loan can be repaid either in lump sum of in fixed monthly installments.
Find out why you need the loan
What is the reason for you to request for a personal loan? Is it for car repairs, home renovation? By knowing how the funds will be spent, you will be able to narrow down your list of potential lenders.
After you already know the reason why you are applying for the funds, you then need to decide the maximum amount you need to borrow. For instance, if you want to use the money for debt consolidation purposes, you need to take enough money to pay off all your debt, including the interest rates incurred in each of the loans. If the loan is to be used for a wedding, you need to come up with the wedding budget that covers all the expenses before determining the maximum amount to borrow.
Consider your current financial situation
Personal loans are unsecured, which puts lenders in a high-risk situation. This is the main reason why the loans attract a higher interest rate. If you think that a personal loan is the best option for you, it is important to first ensure that you are able to make repayments on time. Late payments will not only have a negative impact on your credit score, but you will also be unattractive to lenders if you want to request for another loan in future.
Compared to requesting for loans in a traditional institution, direct lenders have a simple and more straightforward way of approving your loan. Among the things that lenders look for to have your loan approved are your credit history and credit rating to determine whether you are capable of repaying the loan. Since no asset is issued as collateral for the loan, the credit check acts as an assurance to the lender that you will be able to pay the debt. This means that borrowers with an attractive credit have higher chances of their personal loan request forms being approved. Unsecured loans or unsecured personal loan lenders can also offer the loan to borrowers with low credit check. However, the interest rates incurred on such borrower will be relatively higher compared to borrowers with good credit. Other requirements that you need to meet for you to qualify for personal include;
Before the lender approves your loan, they will let you know the terms of the loan depending on your credit score and income history. Some of the reasons that lead to borrowers not having their personal loan request forms approved include;
After you have met all the requirements and submitted all the documents required by the lender, the lender will review your loan request and process it. After the loan is approved, you will be issued with a more detailed information about the loan including the terms and conditions, total amount incurred inform of rates and fees and the loan repayment plan. When it comes to personal loan application, ensure that you only borrow what you can comfortably pay back. There are lenders who can offer a higher loan amount compared to what you need. This can be tempting, but it also means that you will have to incur more amount on interest.
It is also advisable that borrowers should carefully review the loan agreement before signing it. After you have signed the loan agreements, it will only take 2-3 business days for the funds to be credited to your account, although some lenders can even have your money approved in as little as 24 hours. What you need to consider as a borrower is that once you have signed a personal loan contract, there will be no turning back. This means that a borrower must comply with the loan terms and conditions failure to which the lender will take the necessary action.
Most direct lenders advance a personal loan to borrowers with poor credit. This can be helpful especially when you need cash and your credit score is not attractive enough to qualify you for a loan in traditional lending institution. One advantage of requesting for a personal loan is that borrowers who make timely repayments and complete their loan time will have their credit score improve. However, failure to repay the loan as per the loan requirements will have a negative impact on your credit score.
Lenders who offer personal loans are available both online and in store. When requesting for a personal loan, you will be issued with a list of reputable lenders who offer the loan within your region. Here is how you can come up with the best lender;
Ensure that you first check offers from different lenders regarding the maximum loan amount, the interest rates and fees incurred on the loan. This is where you will start doing the math.
If for instance you want to request for a personal loan of $5000, here are two situations that you need to consider
One thing that the borrower will assume is that the lender who charges a lower interest rate is the best option. But if you play with the numbers correctly, you will realize that with the second option, you will incur more than $700 on interest when compared to the first option. When looking for the best personal loan lenders, it is important that you also check the fine prints. Personal loan lenders have varied payments terms. You therefore need to work with the lender who offers a loan term that you are comfortable with. Also find out if there are any prepayment penalties or any fees incurred for late payments.
Requesting for a personal loan can be the best option if you are faced with a financial crisis. The unsecured nature of the loan, flexible repayment loan terms and quick approval rate is what makes the loan attractive among borrowers. Before requesting for a personal loan, it is important that you do your research and only take out the loan from a lender with convenient rates. Also, do not borrow more money than you need since this means repaying more money on interest. You also need to remember that the longer the loan term the more interest the loan will attract. If you find yourself in a situation that requires instant funding, do not hesitate to fill out a loan request form and have your personal loan approved when you need it the most!