Personal Loans Online For Bad Credit

What is a Bad Credit Personal Loan?

Do you need instant cash without going through the tedious paperwork process? Or do you need cash without having to give reasons why you are applying for an installment loan? Or lenders who do not perform a credit check?. If your answers are yes, then requesting 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 required criteria, fill out a loan request form and have the money sent to your bank account.

Do personal loans have monthly payments?

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.

How much can I get with a personal loan?

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.

How long can I borrow for?

Some personal loans can be repaid for a period of 12 months. But if you request 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 payday loan direct 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

One of the things that make the best personal loans attractive to borrowers is low-interest rates incurred. This is applicable especially for borrowers with good credit.

Once the loan is fully repaid  the account is closed. If you still need more financing to cater to your needs then you have to apply for a new personal loan. By repaying your first loans you will have a higher chance of being accepted for subsequent loans.

The loan amount available depends on the lender and the credit score of the borrower.

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Are personal loans secured?

Personal loans are available in two different types – secured and unsecured loans.

With secured loans the borrower has to put up an asset as collateral before the loan is approved.

This can be a car if you’re getting a title loan, house or the borrower’s savings account or just the borrower’s signature as collateral for a signature loan.

If you do not pay the loan on time or miss out on some payments, the lender has the right to repossess your asset.

In this case, you should seek out help from a credit counselor from a loan consolidation company to help you out.

What are unsecured personal loans?

Unsecured personal loans do not require any asset as security. Lenders will determine whether you qualify for the loan depending on your monthly income and credit history. 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 loan lenders available, making it easier for borrowers to apply for a loan without necessarily traveling 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 from 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 personal loans is that they can be used for any purpose. Unemployed individuals can also qualify for a bad credit loan. Here are some of the things you should know about personal loans;

  • To qualify for a 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 another loan in the future.

Eligibility criteria

Before requesting 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
  • Identity proof
  • Address proof
  • 3 months of statements
  • Employment certificate

What is the maximum amount you can apply for?

The maximum amount you can request 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 process.

This is referred to an 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.

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 loans, and this leads to an increase in interest rates.

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 score

Good credit acts as a guarantee that the borrowers can repay the loan. However, some personal loan lenders offer 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 good credit for you to qualify for the loan.

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What Are the Pros and Cons of Personal Loans Online?

Several banks and lending firms offer personal loans online with attractive interest rates and flexible payment options.

For most people, this is the most viable and popular option. Not only is it easy and convenient, but it is also not as difficult to apply for comparison to other financing options.

Basics of a Personal Loan

You may have come across the term “personal loan”. But what does it really mean? What is this kind of loan? There are actually two different types of personal loans: secured and unsecured.

A secured loan is the one that comes with collateral. The borrower needs to have an asset that can be used as collateral. It can either be a car or a property. In the event of default, the lender takes over the asset. Secured loans have lower interest rates and better loan terms.

Whereas online unsecured loans, these do not have collateral, which means that in case of default, the bank can only resort to legal means to collect the money. This makes the loan riskier for lending firms. So, they charge higher interest rates.

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Pros of Personal Loan Online

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Getting a personal loan has its share of advantages which include the following:

  • Convenience and ease of application: Unlike other kinds of loans, take for example merchant cash advance, applying for a personal loan online is quite easy. You only have to fill up an application form online. There is no need for you to go to the bank.
  • Lower interest rates: One of the pros of having a personal loan is compared to the traditional type of loan, the interest rate offered is lower.
  • Quick Approval: Have you ever experienced applying for a conventional loan and you had to wait for a long time only to end up being denied. With a personal loan, there is less paperwork. Hence, loans applications are approved right away.
  • Instant Cash: It only takes a few business days once your loan application is approved. This what makes personal loans a viable option for many. If you are in need of cash in a really short period of time, this might be the option for you.

Cons of Personal Loans

We have talked about the advantages of getting a personal loan, how about its downsides?

  • Need for Good Credit Score: Since these loans are considered to be risky, most firms offering personal loans will require their borrowers to have good credit standing. So, if a borrower has a bad credit score, your application might be rejected.
  • Another disadvantage is the fact that it does not address your financial woes. Oftentimes, people tend to borrow personal loans to spend, to pay bills or to pay off other debts. In which case, your loans will only accumulate which can make it a whole lot more difficult to pay.

Important Things to Consider

After weighing the pros and cons and you finally decide that this is the type of loan for you, there are essential things that you have to take into consideration.

Find a trusted and licensed lending firm. They should be a member of FDIC. This is to ensure that you have a reliable lender. After all, you will be providing your personal data and information during the application process.

Take the time to read the complete terms and conditions of the loan as well as the privacy policy. You don’t want to experience any problems later on. Make sure that you understand everything that is stated.

Read reviews about the company. What do people say about them? How about their loan packages?

Should You Get a Personal Loan?

Getting a personal loan is something that you have to really take the time to think about. Financial needs and circumstances vary from one to another.

But if you are getting a personal loan, it helps that you weigh your options and take the time to do your own research so you can find a reliable lending firm that will not take advantage of your situation.

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 or any type of loans including but is not limited to payday advances online, 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.

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