Personal Loans – More Common Uses
About 61% of the American population lives from paycheck to paycheck. So since most people don’t have any savings they assist their finances via personal loans and credit cards. Even with savings, there are also several large purchases that are difficult to make without the help of some kind of financing. Although there are many different uses for loans, these are the most popular options for which most people use their personal loans:
- Debt Consolidation
- Paying bills
- Medical emergencies
- Shopping and travel
- Family Emergency
These loans can be very useful, but they have to be used responsibly as an unpaid loan can hurt your credit score and opportunities to receive loans in the future.
How Do Personal Loans Work
Personal loans are financial instruments in which a lender makes a credit for a certain amount of money to another person (the debtor). The debtor agrees to pay back the original amount in addition to the interest, and other costs associated with the loan in the time or term defined in accordance with the established agreement.
Always make sure you understand and agree with the loan terms before accepting anything. Terms such as interest and term change according to the following factors:
- Quantity being requested.
- Your credit history.
- Your current debt level.
- Your monthly income.
- Time in your current work and residency.
- Level of education (just a few lenders)
The biggest factors to determine if you apply to a loan are your monthly income, level of debts compared to your income level and your credit history.
Although there are several lenders who do not check your credit (especially personal loans for people with bad credit) it is always good to understand the 5 factors that affect your credit score and how to improve them. Improving your credit helps you save on your finances as it enhances the loan terms you apply to.
PS: If a lender checks your credit make sure to ask what type of credit check they will perform because a “soft credit pull” does not damage your credit but a “hard credit pull” can lower your credit score by some points.
How To Request a Personal Loan
Personal loans have existed since the beginnings of our society, but over time they have evolved. The function is always the same, but the way to receive and borrow has changed a lot over the years.
Historically, loans are received when you go to an institution in person to present your data and expect an agent to review your application. Although this process still exists, with technology and the Internet the process has been greatly facilitated. Thanks to the Internet and technology you have the following benefits:
- The application process can be completed in the comfort of your home and in your own time.
- The approval process takes less time (on the Internet the loan response is instantaneous).
- The deposit of funds are faster (as fast as 24 hours) and direct to your bank account.
- With the ability to compare more online lenders you can find better loan terms.
- Applying online with an encrypted system can be more secure than applying in an office where someone can keep your information without you knowing.
If you want to ask for a personal loan you can review the loan options we work with or the SuperDinero experts can help you for free: hola.superdinero.org/prestamos
Personal Loans According To Your Credit History
Although getting loans is easier for people with good credit record, there are also many options for people with bad credit or who only need a short-term loans due to an emergency. We have created a list of the different possible terms of personal loans according to your credit history and more information on how you can apply:
- Excellent credit: A credit score of 670-850 is considered excellent. By having excellent credit you apply to the best loan terms available in the United States. An estimate of personal loans to which you can apply are amounts up to $100,000 with interest starting at 4.99% and a repayment period of 12-84 months.
- Good credit: A credit score of 620-669 is considered a good credit. By having good credit you still qualify for good loan terms, what changes is the amount you qualify for and the interest you would have to pay. An estimate of personal loans to which you can apply are amounts up to $50,000 with interest starting at 7.99% and a repayment period of 12-84 months.
- Regular credit: A credit score of 580-619 is considered a regular credit. An estimate of personal loans to which you can apply are amounts up to $25,000 with interest starting at 14.99% and a repayment period of 12-84 months.
- Bad credit: A credit score less than 580 is considered a bad credit. Getting a loan with bad credit is harder because you are seen as a “higher risk” for lenders (read more about loans for people with bad credit) but it is still possible to get a loan. An estimate of personal loans to which you can apply is amounts up to $5,000 with interest starting at 19.99% and a repayment period of 2 weeks to 36 months.