Personal Loan Reviews
How Do Personal Loans Work?
A personal loan is a fixed amount of money an individual can borrow and repay over a set period of time. Like all loans, you'll have to pay interest on the amount you borrow. Unlike some types of loans, you don't need collateral to take out a personal loan. You might take out a personal loan for a new appliance, a medical bill, debt consolidation, or moving expenses.
How Do You Apply for a Personal Loan?
First, you'll first want to determine how much you want to borrow. You'll have to pay interest on this loan, so there's no reason to pay interest on more money than you actually need.
Next, check your credit score to make sure you qualify. Checking your own credit score won't affect it. But when you apply, a hard inquiry will impact your credit score, so it's important to know before you apply.
Once you know how much you'll borrow and where your credit score stands, choose a lender. You'll want to get familiar with the annual percentage rate (APR), loan terms, minimum credit score requirements, and whether there's a prepayment penalty.
Now you'll apply for your loan. If you want to apply with multiple lenders, make sure you do this within a 14- to 30-day period. That way, these inquiries will only count as one, thereby reducing the impact to your credit score.
What Are the Advantages of Personal Loans Over Credit Cards?
Unlike credit cards, personal loans are repaid over a short period. If you only make the minimum payment on your credit card, you'll likely never pay it off. Also, interest rates on personal loans are fixed, so they never change. Finally, personal loans typically have lower APRs than credit cards.
How Much Can I Borrow with a Personal Loan?
Typically, you can take out a personal loan for between $1,000 and $50,000, even though some lenders we reviewed will offer loans up to $100,000.
What Can I Use a Personal Loan For?
Unlike a loan for a car, boat, motorcycle, or house, a personal loan can be used for just about anything. You can use a personal loan for moving expenses, medical bills, moving expenses, wedding expenses, home renovations or repairs, vacation costs, or unexpected expenses.
A personal loan allows you to borrow money for personal expenses and repay that amount over a specified time period.
A secured loan is debt that is backed by collateral to reduce the risk associated with lending.
An unsecured loan is debt that is not backed by collateral.
Collateral is an asset that a lender accepts as security for a loan in the event the borrower cannot repay the debt.
A credit score is a number between 300 and 850 that depicts a potential borrower's creditworthiness. The higher a borrower's credit score, the better a borrower looks to a lender, because that borrower has a history of repaying debt and being fiscally responsible.
Debt-to-income ratio is the percentage of your gross monthly income that goes towards paying for debt. It's a factor used by lenders to determine a prospective borrower's risk.