{"id":154,"date":"2018-10-19T22:55:35","date_gmt":"2018-10-19T22:55:35","guid":{"rendered":"http:\/\/loanstar.com\/us\/?page_id=154"},"modified":"2019-07-01T22:34:01","modified_gmt":"2019-07-02T02:34:01","slug":"personal-loans","status":"publish","type":"page","link":"https:\/\/loanstar.com\/us\/loans\/personal-loans\/","title":{"rendered":"Personal Loans"},"content":{"rendered":"

Personal loans are ideal either for small emergencies or big-ticket purchases. But with so many options to choose from, finding the perfect loan product that has favorable terms and suits your needs can be quite the task. <\/strong><\/p>\n

How personal loans work<\/h2>\n

\"\"In a nutshell, personal loans are a form of installment loans that are unsecured. The lender issues you a stipulated amount of funds and expects to be paid back within a certain timeframe. Oftentimes, consumers use loan proceeds to:
\n\t

\r\n\t\t
    \n
  • Get back on track financially after going through a rough patch<\/li>\n
  • Consolidate debt to get a lower rate and make monthly payments more affordable<\/li>\n
  • Cover big-ticket purchases, like a wedding or dream vacation<\/li>\n
  • Take care of the unmet financial need for higher education<\/li>\n
  • Pay for home improvement projects<\/li>\n
  • Pay for medical expenses<\/li>\n<\/ul>\n\t<\/div>\r\n\t\nMonthly payments are the same each month, unless the interest rate you receive is variable in nature. The loan terms you receive will depend on several factors, including the lending laws governing your state of residence, your income, and credit rating.<\/p>\n

    Furthermore, most personal loans are not backed by any form of collateral, like a car or home, because they\u2019re unsecured. This makes them less risky for you since your personal assets won\u2019t be at risk. But in the event you are unable to make payments and default on the loan, your credit rating could take a hit.<\/p>\n

    Key benefits of personal loans<\/h2>\n

    Flexible use<\/h3>\n

    You can use the proceeds of a personal loan to cover just about any type of expense you can think of. The lender won\u2019t be looking over your shoulder to see how you spend the money. Their primary concern is that you make timely payments.<\/p>\n

    Less risky<\/h3>\n

    No need to dig through a loaded filing cabinet or a stack of papers to find your auto title. And you also won\u2019t have to put your home or any of your other valuables on the line. As mentioned earlier, most personal loans are unsecured, so there\u2019s no need to put up collateral to get approved and receive the funds you need.<\/p>\n

    Another major benefit: you won\u2019t be at risk of losing your primary form of transportation to get around or your place of residence if you default on the loan.<\/strong><\/p>\n

    Competitive interest rates<\/h3>\n

    \"\"The interest rates that accompany personal loans are usually more competitive than what you\u2019d find with credit cards, cash advances or title loan products.<\/p>\n

    This is a major benefit if you\u2019re looking to consolidate credit card or other high-interest rate debt to pay off the balances faster. But keep in mind that a lower credit score could mean higher rates.<\/p>\n

    Even better, most personal loans have fixed interest rates, which means you won\u2019t have to worry about your monthly payment skyrocketing in the middle of the loan repayment period. The rate you receive when the loan application is approved is the rate you\u2019ll keep until it\u2019s paid off.<\/p>\n

    Lengthy repayment periods<\/h3>\n

    Unlike payday loans, you\u2019ll have several months or years to repay your loan. This makes taking out a personal loan more affordable to consumers since the total amount of the principal and interest is broken up into small increments, payable each month.<\/p>\n

    Streamlined application process<\/h3>\n

    Most personal loan applications take just a few minutes to complete. Expect to answer questions regarding your:
    \n\t

    \r\n\t\t
      \n
    • Personal information<\/strong>, including your name, date of birth, physical and email address, and phone number.<\/li>\n
    • Citizenship status:<\/strong> In most instances, you\u2019ll need to be a US citizen or permanent resident with a valid Social Security Number to qualify for funding.<\/li>\n
    • Finances:<\/strong> Lenders are interested in learning more about your other debt obligations to determine how much you can realistically afford to pay them each month to settle the loan you borrowed from them.<\/li>\n
    • Employment:<\/strong> The lender may contact your employer to confirm your employment.<\/li>\n
    • Income:<\/strong> This will determine your ability to repay the loan and the amount that should be loaned to you. Self-employment income, government benefits, and alimony may suffice.<\/li>\n
    • Military status:<\/strong> There are strict rules governing personal loans for individuals who are actively enrolled in the armed forces.<\/li>\n<\/ul>\n\t<\/div>\r\n\t\n

      Rapid approvals (for online loans)<\/h3>\n

      \"\"In most instances, you\u2019ll know if you\u2019re approved for a personal loan the same day. And if you apply online through the lender\u2019s website or via a loan search engine tool, you could receive an answer within minutes.<\/p>\n

      Keep in mind that approvals are contingent upon the verification of the information provided in the application. Be prepared to provide personal identifying information, proof of income, and banking information to substantiate your claims. The latter will be used to disburse loan proceeds when the application is finalized.<\/p>\n

      Fast funding<\/h3>\n

      Some lenders offer to fund a loan in as little as one business day. If you\u2019re going with a traditional brick-and-mortar lender, you should receive the funds in your account within three to five business days, but some offer faster funding options for a fee.<\/p>\n

      Less than perfect credit ok<\/h3>\n

      If you\u2019ve had credit troubles in the past, you may encounter more difficulty than usual when searching for a personal loan. However, there are lenders that cater to consumers with less than perfect credit. And the best way to increase your chances of being approved is by using a loan search engine tool that will shop your information around to their vast network of lenders to find the best possible fit.<\/p>\n

      Some important considerations<\/h2>\n

      Risk of more debt<\/h3>\n

      Are you using your loan to consolidate debt? If so, you run the risk of racking up even more debt if you\u2019re not disciplined.<\/p>\n

      Consolidating debt entails moving the debt from one account to another, which in turn means you\u2019ll have a large amount of available credit at your disposal. And if you make new purchases, you\u2019ll end up with double the amount that you started with, which could make it pointless to consolidate debt in the first place.<\/p>\n

      Fees and penalties<\/h3>\n

      Origination fees between 1 and 6 percent are usually assessed when taking out a personal loan. This amount is factored into the monthly payments and paid back over time. And if you wish to pay the loan in full before the repayment period ends, you could face a prepayment penalty.<\/p>\n

      Qualification criteria for personal loans<\/h2>\n

      Wondering if you qualify for a personal loan? Each lender has their own set of qualification criteria, so it\u2019s possible to get a no from some lenders and a yes from others.<\/p>\n

      \"\"Most lenders have a minimum criterion for credit scores and if your score isn\u2019t up to par, your application may automatically be rejected. If it isn’t rejected, expect a higher interest rate to compensate for the increased level of risk you pose to the lender.<\/p>\n

      Since personal loans are unsecured, the risk of loss to the lender is much higher than what it would be with a secured loan product.<\/p>\n

      So, if you don\u2019t pay up, they don\u2019t have any recourse to minimize their losses, which is why they offset the risk of loss with the interest rates that they determine for each loan they offer. Having a higher credit score means you pose minimal risk, and vice-versa.<\/p>\n

      Another major factor in the loan application review process is your income. Having good credit is important, but so is your ability to repay the loan. For this reason, the lender will consider your income to determine how much you can afford to pay each month without being overextended. The monthly payment amount, coupled with the interest rate, ultimately determines the loan amount and repayment period.<\/p>\n

      Before you apply<\/h2>\n

      1. Check your credit<\/h3>\n

      \"\"Creditworthiness is one of the primary factors used by the lender when deciding whether or not to approve your application and at what interest rate and terms to offer you.<\/p>\n

      So, it\u2019s a good idea to check your credit to see where you stand so you won\u2019t be caught off-guard if the lender finds negative information you had no knowledge of.<\/p>\n

      When reviewing your report, look for inaccurate or untimely information and file disputes promptly. For negative information that is correct, devise a plan of action to remedy it before applying.<\/p>\n

      But if you can\u2019t afford to wait, be prepared to receive a higher interest rate. Otherwise, it may be worthwhile to work towards a higher score so you can pay less in interest over the life of the loan.<\/p>\n

      2. Evaluate lenders<\/h3>\n

      Not all lenders are created equal. They come in all shapes and sizes, have different qualification criteria, and offer loan products with varying repayment terms and interest rates. Also, keep in mind that all lenders aren\u2019t what they appear to be, and there are tons of scammers lingering around waiting on cash-strapped consumers to fall victim to their deceptive schemes.<\/p>\n

      You\u2019ll have to do your due diligence to confirm you\u2019re dealing with a reputable company. A few things to be on the lookout for:
      \n\t

      \r\n\t\t
        \n
      • Secure website:<\/strong> The website URL should read \u201cHTTPS\u201d and not \u201cHTTP\u201d. Otherwise, it\u2019s not secured and any information you enter could be swiped by a cyber-scammer lurking around the web.<\/li>\n
      • Contact information:<\/strong> Does the company have contact information listed on their website? If they\u2019re online, they should still have a physical address where customer inquiries can be sent. They should also have a customer service representative offcie that can be reached by phone.<\/li>\n
      • Better Business Bureau (BBB) accreditation and rating:<\/strong> Are they a BBB accredited business? And if so, how are they rated?<\/li>\n
      • Customer reviews:<\/strong> What are customers saying about them? If a bulk of the reviews are negative, that\u2019s a good indicator that the service they provide isn\u2019t up to par and you should look elsewhere. And if you happen to spot a slew of reviews that sound too good to be true, they probably are.<\/li>\n
      • Bogus fees:<\/strong> A reputable lender won\u2019t ever ask you to pay an application fee to move forward with the process.<\/li>\n<\/ul>\n\t<\/div>\r\n\t\nThese are just a few of the red flags to be on the lookout for. Use your best judgement, and consider the recommendations of family and friends before settling on a lender.<\/p>\n

        3. Shop around for rates<\/h3>\n

        You should ensure you receive the most competitive rate on the market based on your financial situation. So, it\u2019s best to shop around with at least three lenders before making a decision. Or you can make your life easier and save a ton of time by using a loan search and comparison tool to do the legwork for you.<\/p>\n

        4. Run the numbers<\/h3>\n

        Use a loan calculator to get an idea of how much your monthly payments will be based on the amount you want to borrow. If it\u2019s too high, consider applying for a smaller amount to minimize the risk of default. Otherwise, you could damage your credit.<\/p>\n

        5. Devise a strategy to repay the loan<\/h3>\n

        There\u2019s no need to only pay the minimum each month if you have extra funds at your disposal. Instead, pay the loan off as soon as possible to save on interest, but be sure prepayment penalties don\u2019t apply.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Personal loans are ideal either for small emergencies or big-ticket purchases. 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