Take Control of Your Finances In 2020
Are you searching for short and long- term loans with the best interest rates out there?
Look no further as we bring you the Top 2020 Personal Loan Companies.
Browse our review section, compare rates, get informed, and apply for your Personal Loan today.
Why Get A Personal Loan?
Personal loans are an easy and quick way to help you eliminate debts with high-interest rates. They are perfect for immediate debt management. However, in order to get the optimal benefits from a personal loan, you should know how they work. This knowledge helps you save time and money.
Like all loans, personal loans offer you a fixed sum of money at an interest rate for a certain amount of time. However, unlike other loans, you can use the amount for a wide variety of expenses ranging from home improvement projects to paying off high-interest rate credit card debts. Personal loan companies and lenders will normally have lower interest rates then credit cards.
Personal loans can usually be paid back in monthly installments until the repayment of the loan is complete. It is ideal for someone who wants immediate cash or, as stated earlier to consolidate higher interest rate loans one might already have.
5 Factors that impact personal loans besides your credit score
Nothing can be more frustrating than having your loan application refused. That feeling that all hope is lost is very damaging. Before you apply for any personal loan, ensure you check the following 5 factors that usually determine a typical personal loans approval:
Income- Personal loan companies will never lend money to you if you can’t pay them back. For instance, if your monthly income is $5000 you will never be granted a loan where the monthly repayments are $1000. Lenders take into consideration your ability to pay back your loan, so it such a case clearly it would be rejected. However, if your monthly repayment is only $100 every month, your application will most likely be granted. In short, the monthly payments for a loan should be a small percentage of one’s income.
History of employment – Lenders look for proof of employment to establish your source of income. They need to be sure that your income is steady and you are not on the verge of losing your job. The standard length of continued employment is around three months.
Do you have other debts – Besides your income, personal loan companies make sure you are not stuck in a mountain of debt already. This is an automatic red flag.
Have you applied for other loans recently? Another red flag for personal loan companies is if you are applying to every company under the sun. If you are on a borrowing spree, potential lenders will see you as desperate, and desperate people tend to default on loan payments. Every time you apply for a loan, a hard inquiry is stamped on your credit report.
Whether you can guarantee the loan with collateral – If most of the eligibility factors go against you for a personal loan, you can approach some companies that offer you secure loans with unsecured loans. These companies look for collateral and if you can provide it to the lender, chances are high your loan will be approved.
Mistakes To Avoid When Applying For A Personal Loan:
If you want to get the best out of your personal loan, watch out for the following-
- No pre-payment penalties
- Avoid insurance policies on any loan. There are some companies that might try to sell you insurance policies as part of the agreement. Stay away from them as these are almost always pretty bad deals. Like selling you undercoating when buying a car.
- Compare the APR (fee + the rates of interest). Most personal loan companies will give you an APR so when you are comparison shopping, keep this in mind.
Do Personal Loans Have Fees?
Most personal loans do have fees associated with them. For instance, if you borrow $100, you could be charged an upfront fee, say from 2% to 4%. This means that if you borrow $100 and there is a 2% fee, this means you need to pay $2 for the loan upfront. When you apply for a personal loan, you should know how this fee is being applied. There are some personal loan companies who might deduct this fee from the loan proceeds. So, in the above case, if you borrow $100 from the company, you will be given $98 as it will deduct the $2 fee when the loan is given to you. Please understand this fee structure before you apply for a loan from any personal loan company.
How do Personal Loans Work?
Personal loans are normally applied for online as of 2020. They are unsecured loans that require no collateral like putting up your home or car. Personal loans can range anywhere from $500 to $50 000. These loans are issued on the creditworthiness of the borrower. These debts can be used for the payment of credit card bills, home improvement, debt consolidation, business purposes, etc.
Can I Apply for a Personal Loan With Bad Credit?
This depends on the individual lender’s criteria. To be eligible for a personal loan, you should have :
- A permanent source of income- employed or self-employed
- Should be a resident of the USA above 18 years of age
- Should have a driver’s license or a State ID
- Should have a valid saving or checking account
- Should be able to show the source of income (direct deposit preferably)
The duration of loan repayment varies from company to company. However, on average, it ranges from 3 months to 72 months subject to the terms and conditions of the lender.
What Does APR Mean?
The average interest rate of your loan is known as the APR or Annual Percentage Rate. It is a finance charge that is charged annually instead of monthly. It generally starts at 6% and can go as high as 36%. The interest rate and monthly repayment rate is fixed. The APR is fixed as per your monthly income and credit score. Most personal loan companies will give you your assumed APR rate without harming your credit score.
In order to get the best APR for your loan, you need to compare the interest rates for personal loans of several companies. The interest rate you choose can be a fixed rate or a variable rate of interest.
What Is The Difference Between The Apr And Interest Rate Of A Loan?
The rate of interest is the cost of borrowing the cash otherwise known as the principal loan amount. When you are applying for a personal loan, you should know the difference from the APR that includes additional costs and fees.
For instance, if you are taking a personal loan for $20 000 with an interest rate of 6%, your annual interest rate will be $1200 or $100 every month.
The APR, on the other hand, should be used for comparing personal loans from different companies to help you save costs. This amount includes the rate of interest and associated fees like broker costs, rebates, closing costs, and discount points. The APR is represented by a percentage and should always be greater or equal to the nominal rate of interest, except on deals where the lender provides attractive rebates on a portion of the interest costs.
Is It Better To Have A Lower APR or Interest Rate?
As a principle rule, if you are looking for affordable payments every month, focus on a lower interest rate. If you are looking at saving money on the overall cost of your personal loan, choose a lower APR.
3 factors that affect the interest rates of a loan:
- Variable or fixed rates of interest
- Duration of the repayment
- Credit Score
An Insight Into Your Credit Score as it Impacts Your Personal Loan Approval:
Most lenders use standard credit score parameters like the official FICO credit score that measures the credit rating of borrowers based on the following scale-:
- 800-850 (Excellent)
- 740-799 (Good)
- 670 -739 (Average)
- 580-669 (Fair)
- 579 and below (Bad)
There are some P2P lenders that may ask you to indicate your credit score by range, i.e. excellent, good, average, etc. so that they do not need to pull out your credit report.
How Much Can You Get?
If you qualify as per the lender’s criteria. You will be eligible for a wide range of loan amounts. The online application process makes it easier for you to apply from anywhere. Your online application is encrypted so your personal information is confidential and safe. It is quick and once approved, you will get the amount credited to your checking account in as little as 1 to 2 business days.
Websites will have an application form online where you need to fill in details like the amount of loan you would like to take, the reason for taking the loan, along with other personal and banking information. This information helps the personal loan company determine how much you may be eligible for. It’s a simple process.
Is it Secure to Apply For A Personal Loan Online?
Online personal loan applications are 100% safe and secure if you undertake careful research to choose credible lenders. Never rush with your choice. Compare online quotes and never forget to read the reviews and ratings of the site before you apply.
Before You Apply, Shop and Compare Online
You must understand clearly what you are getting into. Never hesitate to ask questions and contact the customer service desk of the company with concerns and doubts. Avoid applying for several loans at once. Pay your bills on time and keep your income stable. With these simple steps, you will optimize your chances of approval for a personal loan at a favorable rate of interest. Below are tips to remember when shopping for the best personal loan for your needs:
- Compare the best 2020 personal loan companies online. Read their reviews.
- The lender should be legitimate. Research well to avoid scams.
- Compare charges and fees associated with the loan. Check and choose competitive rates in the market to make informed choices.
3 Quick Steps To Apply For A Personal Loan Online
- Fill in the application form with all your details correctly, don’t lie
- Upload your documents and wait for the approval. (or in some cases you can verify directly through secure portals to your financial institution)
- Have the money deposited in your account within 1 to 2 working days