Finding the best personal loans for individual and business needs

 

Do you need instant cash without going through tedious paperwork process? Or do you need cash without having to give reasons why you are applying for a loan? If both of your answers are yes, then requesting for a personal loan can be the best solution for you. Generally, the best personal loan lenders approve the loan in as soon as 24 hours. The only process involved is for you to meet all the requirement criteria, fill out a loan request form and have the money sent to your bank account.

Personal loans are offered for a fixed period of time, and at a fixed rate of interest. The borrower is expected to pay the loan in monthly installments. The good thing with best personal loans is that lenders can tell how much they borrow, the total amount to be repaid, which is inclusive of the principle and the interest and by when the loan should be repaid in full. Personal loan terms depend on several factors and lenders can issue the loan for up to $50,000, although the amount limit varies depending on the lender.

Some personal loans can be repaid for a period of 12 months. But if you request for a larger amount, the duration can last up to 20 years. Besides the interest rate, personal loans also attract an origination fee ranging from 1-8% depending on the lender. But since this is a competitive business and lenders are always coming up with strategies to attract more clients, most of them do not charge origination fees, or any other initial fees.

What you should know about personal loans

Best Personal LoansOne of the things that make best personal loans attractive to borrowers is the low interest rates incurred, and especially for borrowers with good credit. Once the loan is fully repaid, the account is closed. If you still need more finances to cater for your needs, then you have to apply for a new personal loan. The loan amount depends on the lender and the credit score of the borrower.

Personal loans are available in two different types – secured and unsecured loans. With secured loans, the borrower has to issue an asset as collateral before the loan is approved. This can be a car, house or the borrower’s savings account. If you do not pay the loan on time or miss out on some payments, the lender has the right to repossess your asset.

Unsecured personal loans, on the other hand, do not require any asset as security. Lenders will determine whether you qualify for the loan depending on your monthly income and credit history. However, unsecured loans tend to attract higher interest rates compared to secured ones.

Where can you get a personal loan?

Banks are the first place that comes into a borrowers’ mind when it comes to personal loans. But these are not the only institutions where you can request for the loan. Credit unions, peer-to-peer lenders and consumer finance companies will also offer advances to qualified borrowers. There are also online lenders available, making it easier for borrowers to apply for a loan without necessarily travelling to a physical location.

Advantages of personal loans

Flexibility of use

Personal loans can be used for various purposes, from medical expenses, business and emergency expenses or even for home improvements. But as stated earlier, it is important to first find out if the uses are really worth you taking the loan.

Quick availability

Applying for a loan in financial institutions involves a lot of processes, and it can even take months for the loan to be approved. This can be inconveniencing and especially when you want to use the loan for emergency purposes. But this is totally different with personal loans. Generally, personal loans take 2-3 business days to be approved. Some personal loan lenders can even approve the loan within 24 hours.

Minimal documentation

Compared to other loan times, personal loans do not have much paperwork involved. This makes the loan processing much faster and convenient

No collateral required<

You don’t need to issue any of your assets as collateral when taking out an unsecured personal loan. This poses less risk for the borrower. It is among the features that make personal loans attractive, and especially those who do not have high valued items to issue as security.

Important tips to know before applying for a personal loan

One of the advantages of requesting for personal loans is that they can be used for any purpose. Unemployed individuals can also qualify for the loan. Here are some of the things you should know about personal loans;

  • To qualify for higher principal amount, you must have a good credit rating.
  • Personal loans have a fixed repayment period. The longer the repayment term the less amount you will incur in monthly repayments.
  • If you do not repay the loan on time, you may have challenges requesting for another loan in future

Eligibility criteria

Before requesting for the loan, there are some basic conditions that the borrower needs to meet. This also differs from one lender to another. But some of the requirements that cut across the board include;

  • You should be between the ages of 21-58 years old
  • Employed individuals should have been on the same job for the past 6 months
  • Iidentity proof
  • Address proof
  • 3 months statements
  • Employment certificate

What is the maximum amount you can apply for?

The maximum amount you can request for depends on the lender and the borrower’s credit rating. Other factors determining the maximum amount you are eligible for include how long you have been on employment and your current income.

Impact of personal loans on your credit score

When you apply for a personal loan, your credit information will be used as part of the approval requirements. This is referred to as hard inquiry. Hard inquiries generally stay on the borrower’s credit report for a period of 2 years. When looking for the best personal loan rates, lenders who already have your account will review the credit information, referred to as soft inquiry. It is advisable that you check with lenders that can do soft inquiries, which will not have an effect on your credit score.

Interest charged on personal loans

As much as personal loans can be the last resort for individuals who need instant cash, most borrowers are reluctant to take up the loan due to the high interest rate charged. Typically, personal loans attract relatively higher rates compared to other loan types. Since most of the best personal loans are unsecured debts, borrowers find themselves in a high-risk situation when offering the loans, and this leads to increase in interest rates. However, the interest rates also vary from one lender to another. In most cases, lenders offer a rate of between 5-36% depending on the credit score of the borrower. The longer the loan term is, the more interest will be incurred.

Qualification for personal loans

If you consider requesting for a personal loan, here is what you need to achieve:

Credit scoren

Good credit acts as a guarantee that the borrowers can repay the loan. However, some personal loan lenders offer the loans to borrowers with poor credit as well, though you will stand a better chance of your loan being approved when you have excellent credit.

Proof of ability to repay the loan

For you to prove to the borrowers that repaying the loan will not be too much of a burden, you need to give proof of your monthly income in form bank statements or pay stubs. The most positive thing is that you don’t have to be employed for you to qualify for the loan. Provided you receive consistent income in your account, which also includes government benefits, your loan will be approved.

Low debt to income ratio

If you have a high debt to income ratio, lenders may be reluctant to approve your loan. You can determine the ratio by dividing your total monthly debt by your total monthly income. If the ratio is below 36%, there are high chances that you will qualify for a personal loan.

Low debt to income ratio

If you have a high debt to income ratio, lenders may be reluctant to approve your loan. You can determine the ratio by dividing your total monthly debt by your total monthly income. If the ratio is below 36%, there are high chances that you will qualify for a personal loan.

Co-signer

If you have a poor credit score, some lenders will need you to have a co-signer who MUST have a good credit for you to qualify for the loan.

Conclusion

Requesting for a personal loan is definitely the best option considering the ease of application and a fast approval process. But it is also prudent to take the loan only when faced with unavoidable circumstances that require immediate funding. Another instance where you can take out a personal loan is when you can use the money for debt consolidation and save money on interest rates.

Best Personal Loans

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