Is A Personal Loan Right For You?
- Posted: March 31, 2020
It’s not uncommon for people to initially assume that they can’t get a personal loan. In today’s current economic environment, a number of people are struggling with credit issues and, while they might benefit from consolidating their debt into a personal loan, but they immediately worry that they might not qualify for a new loan. The good news is that, even in today’s troubled times, there are still opportunities for thousands of Americans to be approved for a personal loan.
In its simplest form, a personal loan is money borrowed from an online lender, credit union or bank. The person receiving the loan would be required to make monthly payments for anywhere from two to seven years as they pay off the loan balance and the interest rate each month. A vast majority of personal loans do not require any collateral (if they do require collateral, they would be referred to as a secured loan which would be subject to forfeiture if you default on the loan).
While an unsecured loan can have interest rates above 30%, many people could benefit from moving larger credit card balances over to a lower interest rate personal loan. Moving or consolidating higher interest debt into a single personal loan is known as debt consolidation. Many times this can make the debt less expensive (lower interest rates) and easier to manage.
There are a number of websites that can help you research where to find a personal loan – it is important to shop around and find the best rate you can. Keep in mind that simply consolidating your outstanding debt may not be the right decision if you are not able to secure a better payment schedule and/or a lower rate.
While you are reviewing potential lenders, they are also reviewing you and your credit history. Before you begin to apply for any loan, you should check your credit score. There may be a number of things you can do to improve your credit score, which in turn, could reduce the amount of interest you pay.
As you prepare to search for a personal loan, here is a quick checklist for you to review:
• List your current outstanding loans, total amount owed and the interest rate you are paying
• Review your credit score. There are a number of resources online to help you do this.
• Make a list of assets you currently have (bank balances, investments, etc.)
• Pull together your salary history (recent paycheck information and/or Income Tax Returns)
With this information available, you will be ready to begin your research and find a personal loan that is right for you and helps you better manage your outstanding debt.