Having Issues with Qualifying for Loans? Here’s What You Can Do

It is normal to be in need of cash from time to time, and there are a lot of solutions for you to get it. You could have friends and relatives that are buoyant enough to lend you one, or you could apply for a new credit card. However, the most preferred option that will benefit you a lot, with numerous advantages is the option of obtaining a personal loan. With a personal loan, you will be open to any amount you want to lend.

To qualify for a loan deal, you have to ensure that you do not have a high debt to income ratio.

But you will need to know how obtaining personal loans work because this could be very different from credit cards in terms of varying rates in interest and different amounts you are mandated to spend. With a personal loan, you have the option of lending the exact amount of money that you need, with a fixed interest rate as well as a stipulated date that the money must be repayable.

Other conditions of a personal loan deal could include fixed monthly payment of which you can agree to pay before the stated period. With this, you can be able to plan and budget your loan more easily. There are also some situations where you have the benefit of a low-interest rate on a personal loan, and this is mostly based on the creditworthiness of the individual that is collecting the loan.

Types Of Personal Loans

But it should be known that there are two distinct types of personal loans and they are unsecured personal loans and secured personal loans. For unsecured ones, no collateral is demanded by them but for secured personal loans collateral(s) are required. The advantage for secured loans is that you may not have to pay a high interest since you are getting the loan with collateral of high value like a car or a house.

You need collateral for a secured loan, but it isn’t needed for an unsecured loan

Due to this, a lot of people tend to prefer unsecured loans more than secured ones. Prior to obtaining unsecured loans, you must be aware of some details.

In unsecured loans, you only get to borrow a fixed amount of money, and interest rate, monthly payments as well as repayment period are fixed as well. You should also know that most personal loan available to all to sundry today are unsecured.

Reasons For Obtaining Personal Loan

There are one million reasons to take a personal loan, and this depends on the individual who is borrowing the money. It could be to start up a business or to complete a project. However, most times people tend to use the personal loan as consolidation for debt.

For example, if an individual has a high-interest credit card debt such that monthly budget is being flawed, with a personal loan the debt can be consolidated. The advantage of this is that the credit card debt might be accruing high-interest rates. But with a personal loan, the interest rate will be much lower, and the person will also have a feasible pay date such that budget can be planned accordingly.

A personal loan can also be obtained for paying education fees, home project, and repairs, as well as covering up for other major expenses.

Finding The Right Personal Loan Deal

There are numerous factors that you have to consider when looking to obtain a personal loan. The first step in locating the lenders, such that you can be able to compare their conditions in terms of interest rate, loan fees, and fine prints.

It is rational to want to pick the lender that offers the least interest rate, but make sure that the loan fees are also favorable as well although the competitive nature of personal loan deals between lenders today means that some personal loan deals are void of loan fees for a customer who meets the conditions to qualify.

Comparing the terms and conditions for various lenders is a good way to obtain a personal loan deal

How To Qualify For A Personal Loan

With some lenders, to qualify for a personal loan deal. You must have a credit score of around 500. Some may also require that you put down collateral before you qualify for the loan deal and if this is not possible, you may have to make up for it by paying a higher interest rate.

Most lender minimum credit score could go higher than 500, with some requiring about 680. A credit score below this figure means that you qualify for the loan. However, on the account that you have a higher credit score, you might only be considered for the personal loan with the condition of high-interest rate.

Other conditions to make you qualify include proof of employment and your ability to repay the loan at a stipulated time, debt to income ratio to make sure you are having more debt that payroll can take.