Over the past couple of years, more and more people are opting for a personal loan. It can be used for practically any purpose, which just goes to show that it is one of the most practical ways to borrow money.
Borrowed from an online lender, credit union, or bank, personal loans or payday loan alternatives can be utilized for a lot of personal reasons. It can be because you want to obtain the latest energy-saving heating system in your house, or simply to consolidate high-interest consumer debt.
As you can see, there are so many reasons for one individual to choose a personal loan, but the question is – are you qualified for that? In case you weren’t able to find the answer to that question, we will provide you with some useful answers right now!
Are You Eligible For A Personal Loan Or Not?
Your Credit Score
For sure, this is one of the most essential elements of the puzzle. Namely, lenders always prioritize this because it is their way of knowing if you are creditworthy or not. So what does it mean?
It means that if your credit score is relatively low, then you might be too risky for them. It’s important to understand that lenders have to find a way to protect themselves from anyone who isn’t reliable enough.
That’s why they tack on high-interest rates, and at the same time, they reserve the rates that are the most competitive for individuals who have amazing credit. For example, if your score is lower than 640 then it will be hard for you to find a solid personal loan.
On the other hand, people with that score, or higher are way more qualified for APRs as low as 2.49 percent. Now, if your score is low and it doesn’t allow you to have a personal loan that has a good interest rate, then you should bring on a cosigner.
If you come to the realization that that’s not an option, then it’s time to be very honest with yourself and determine why you are opting for a personal loan at all. At the end of the day, it’s not an easy decision.
Give A Loan Calculator A Chance
Before you even consider the type of lender that is the best for you, you should first conduct research to see if they have a loan calculator or if they can provide you with a loan estimate. Viz, a loan estimator represents a generic tool that can be used to see what type of loan a lender is offering.
This is a great option because you are not obligated to enter your personal information. Furthermore, this tool is going to give you a rough guess of how much you can actually borrow, however, it is not going to be personalized to your existing financial context
Now, if you’ve already tested out both of these tools and learned all about the products that a potential lender has to offer, then it is a perfect time to see if this lender can give you a personalized loan quote. If you’re interested in a reliable lender, then at PrimeLending in Red Bluff you can get all the necessary information you need when it comes to this. A reasonable lender must be able to take enough of your info to be able to easily make a quote that is going to showcase your existing financial standing.
In these types of situations, a lender mustn’t require any hard credit check. Bear in mind that each time a lender does that, a credit bureau is notified. More importantly, having a lot of credit checks so close together can literally negatively affect your credit score.
What Else Is Important?
Your Payment History
Also one of the most important elements, besides credit score is precisely this one. Namely, it surely carries the heaviest weight when it comes to deciding whether your credit score is acceptable enough or not.
Furthermore, it makes almost thirty-five percent of your overall FICO score. That’s why you should always keep an eye on all of your payments because if you have a long history of missed payments, you will eventually regret it.
This is very strict. Even if you have one late payment, it is going to be seen on your credit score for a staggering seven years. As we previously mentioned, a lot of lenders are going to be searching for a credit score that’s either solid or excellent.
This means that they will definitely focus on your repayment history. Why are they doing all of that? It’s because they want to make sure you are going to be very responsible when it comes to personal loan payments. If you have a good track record regarding on-time payments then it is going to increase your chances of getting approved.
Before a lender writes you a check or gives you the stamp of approval, he or she is going to focus on your financial situation, meaning your income. This means that he/she wants to ensure you have a steady income.
Besides all those typical credit score questions, this one is for sure one of the most common. Along with that, they are also going to be interested in the amount of money you want to borrow and when you’re planning to return it.
Keep in mind that a short personal loan means higher monthly payments. For example, if you want to borrow 15,000 US dollars, with a repayment period of ten years, and you have an interest rate of eight percent, then your monthly payment is going to be around 180 US dollars.
On the other hand, if you have a five-year term, then you are going to have a monthly payment that’s a little bit higher than 300 US dollars. Although the shorter term means that you have to pay more each month, it is definitely a much cheaper option.
Getting a personal loan, as you can see, can be quite complex. Still, before you make any decisions, remember that all lenders are different. Some are going to more or less demanding, but with a little bit of luck, you are going to find the most suitable one.