August 15, 2016
The Difficulty in Getting a Personal Loan, and What You Can Do to Help
Whether it is to fund a dream-vacation, meet the most basic living-expenses, or fund a wedding, you’ve probably considered how difficult it would be to get a personal loan. It can be a bit tricky to get a personal loan because there is no collateral to help ease the mind of the creditor. This means that you can’t put up your car or home to help gurantee the lender that you will cover the loan amount. The risk is what makes it more difficult to acquire a personal loan, and is why you will be faced with higher interest rates.
However, it is not impossible to secure a personal loan. In fact, if you use a personal loan correctly you can save big money relative to Payday Loans. There are some key things to keep in mind when shopping for a safe Payday loan. We’ve included a list of four of the major tips below:
Specifics – When it comes to securing a safe personal loan, first try to understand the specific type of loan you need. When someone refers to a personal loan, they usually mean an installment loan that is closed-ended. Make sure you understand the difference between an installment loan, an auto loan, mortgage, and payday loan. This will not only help you in your search for its own sake, but will help you appear less ignorant when speaking with lenders.
This will also help you when negotiating. Often times a creditor will offer other better options if your credit score is too low. For example, they may offer you a collateralized loan. Showing that you understand what a collateralized loan is will help you earn the trust of the creditor, and secure a loan.
Know your score – More important than knowing the credit score itself is that you know what your score means with regards to securing a loan. This will help you save time because you won’t waste it applying for loans you simply do not qualify for. This is important because each time you do apply for a loan, it is reported and your score will fall. Request a free credit report at least once per year and check it for inaccuracies to help fight for your reputation amongst potential lenders.
Improve Your Score – Credit Scores are not forever. Take steps to improve your score to give yourself a better chance at securing a personal loan. Remember, a good score will be above 700, a fair score above 640, and below that is pushing it when it comes personalized loans. By paying bills on-time and reducing your debt-to available credit ratio, you can ensure yourself the best chance of being favorably assessed.
The Right Lender – It is important that you find the right lender for your particular credit score. If you score below 700, don’t expect to get a loan from most large banks. Those that are able to lend you credit will also demand a higher rate of interest rates. Thus, knowing your options will help you minimize the toll of a poor credit score. For example, a score below 640 may rule out conventional lenders, but finding the right online lender can still provide a quality personal loan experience.
So in the end, yes, finding a personal loan can be difficult. However, knowing where you stand and who can help will make all the difference.