Personal loans are viable options for many financial situations. In some cases, you can borrow money to pay for a large unexpected expense. Or, a personal loan can be used to consolidate debt.
Unsecured personal loans come with a fixed interest rate. They aren’t backed by other assets or collateral. They’re usually for a few thousand dollars and are repaid each month. Unsecured loans are typically issued for between 24 and 60 months.
The interest rates for personal loans are based on your credit history. Lenders look at things like your credit report, your current debt, and your credit score. Personal loans could be issued by both local banks or large online lenders.
If you have better than average credit, you can expect to get a better interest rate. You can also borrow more money with a better credit history.
For those with low credit scores, finding a personal loan can be more challenging. They can expect higher monthly payments or stricter loan terms.
To increase your chances of approval for a personal loan, ensure you have a steady income. Having a history of on-time payments can also improve your chances of getting approved.
Do This Before Signing a Personal Loan
Before you commit to a personal loan, we recommend taking the following actions:
Hopefully these tips will help you while you do research on personal loans. If you think we missed anything or have a question about personal loans, let us know in the comments and we’ll address it. And don’t forget to subscriber to our newsletter for the latest from financialstress.com.