Loans are of various categories. You can find a mortgage loan, car loan, student loan, and even personal loans. Personal loans include money you borrow from financial institutions such as banks and credit unions to pay later in installments or fixed payments. Most banks give the best personal loans for fair credit as compared to other Institutions. Some online lenders can provide you personal loans. Personal loan lender rates can range from 6% to 36% APR in most cases.
Personal loans are mostly for urgent expenditures such as paying for medical bills, transport, purchase of food, and payment of rent, among other uses. Some personal loans are unsecured, meaning that you do not present any collateral. You can also have a secured personal loan by placing an item as collateral. Unsecured personal loans may be expensive as compared to secured personal loans. Failure to pay the secured loan in the specified period, you might lose your item.
If you want to get a personal loan, you may need to have a credit history showing how you have been paying your debts. Your bank will also look at your credit score to determine how much loan to give you. However, if you do not have a credit history, then you can qualify for first time personal loans with no credit history by either placing collateral or getting one of your relatives to be your cosigner with you in the process.
What are the main reasons to take a personal loan?
A personal loan, just like any other loan, should have a specific purpose. You should have a genuine reason before applying for a personal loan. If you apply for a personal loan without any legitimate reason, you might end up misusing the money and thus end up paying a loan that did not benefit you.
Do you have any reason to apply for a loan? The following are the main reasons that should drive you to apply for a personal loan.
i) To consolidate debts
If you have various debts such as credit cards, auto loans, mortgage loans in a bank, and so on, you can consolidate them and start paying as one debt. Consolidating loans into one reduces the financial strain that can come about due to paying too many debts per month.
Consolidating debts ensures that you pay lower interest rates. Lower rates insinuate that you pay less money generally.
ii) For home modeling
If you are planning to make some changes in your home, then getting a personal loan can be of great help. Changes include changing the roof as well as painting the house walls.
If you do not have equity to your home or do not want to take one, then a personal loan can be a great fit. Again, personal loans can be helpful if you do not want to take home equity or HELOC.
iii) To avoid Payday loans
Some people may rush to take payday loans to finance their financial issues. However, Payday loans are usually expensive to use and can even worsen your financial problems. They charge high-interest rates of up to 400%. Fortunately, they are also easy to get.
Personal loans can be great alternatives to the payday loans since they are straightforward and charge low APR. Furthermore, personal loans are available in various financial institutions. Apart from banks, you can get personal loans from a credit union as well.
iv) For relocation
If you have got a new job far away from your current residence, you might find relocation a bit expensive. Due to this, you can apply for personal loans to move your items to a new workplace. However, you should be careful to avoid taking a loan that you cannot pay comfortably.
If your new salary won’t facilitate the loan payment, then you better not take the loan and find other ways to help you move.
v) For emergency cases
You might find yourself in such avoidable emergency cases such as hospital bill payment, whereby you or a relative receives costly treatment such as surgery, dental problems, or any other. Medical situations that warrant traveling abroad may force you to apply for a personal loan.
Moreover, sudden cases such as funerals need urgent money to finance the process. If you lack enough cash in your bank account, you can consider a personal loan to cover the burial expenses.
We all understand that education is the key to a better life. If you find yourself stranded to pay school fees, you can apply for personal loans for students with no income. This way, you will be okay. Getting school fees is sometimes very challenging and can cause havoc to some extent.
vii) Making a larger purchase
In case you are planning to buy a house, then getting a personal loan can be of great help. If you want to buy a car, then getting a personal loan can be of great help since you need a large sum of money, which might be unavailable.
Moreover, you can take a personal loan to finance your wedding expenses. Weddings require a lot of money which might be unavailable at hand. Again, you can take a personal loan to finance a vacation. Going for vacation needs a lot of money, which might be challenging to get in a lump sum.
Getting a personal loan can help ease the situation. However, it is essential to note that you can use a personal loan for any purpose but not necessarily for the uses mentioned above.
Which are the nine best personal loans for fair credit?
They include the following.
The upstart lender offers maximum borrowing flexibility, and one can get a personal loan of up to $50,000. Moreover, you can use the loan for anything important to you. It requires a minimum credit score of 620. Furthermore, there is no prepayment penalty. Unfortunately, the loan has a high origination fee of up to 8%.
The loan is best for debt consolidation. Having very many separate debts can destroy your credit score. Combining all those debts and paying them as one entity helps you increase your scores as well as helping you to plan effectively. The Payoff allows you to borrow a maximum of $35000. Again, there are no prepayment penalties with this company.
The lender has a well-improved app that enables you to manage your account on the go. Using the app, you can also check your credit scores periodically. Upgrade has various loan options. You can have a debt consolidation loan, pay down high-interest credit cards, make a significant purchase, such as a car, or improve your home’s appearance. You can receive a loan of up to $35,000 with APRs starting from as low as 7.99%.
4) Best Egg
The Best Egg is an online lender. You can get a personal loan of up to $35,000 with a credit score of 640 and above. It offers interest rates starting at 5.99%. To get this loan, you need a minimum individual annual income of $100,000 to qualify for the lowest APR possible. There is no prepayment penalty, and the company approves loans for various purposes
The company offers loans up to $25,000 to people with credit scores of as low as 585. People with previous bankruptcy cases may also apply as long as it is 12 months old after clearing. Lending point charges an interest rate of 9.99%. You can get a loan amount of $25,000. You must have at least $35,000 as your annual income.
Prosper is a peer to peer lending company that gives you either three or five year repayment periods. The APR rates range from 7.95% to 35.99%. There is no prepayment penalty whatsoever. Again, it is easy to check how much you qualify to get. Prosper gives loan amounts of between $2,000-$40,000. The late payment fee is $15 or 5%, while the origination fee is between 2.40%-5%.
LendingClub is a peer to peer lender. You can qualify for a personal loan with as low as 600 credit scores. The interest rates are in a fixed state, and you can get a loan of as low as $1,000. Again, you will pay a late fee of $15 or 5% and an origination fee of between 2%-6%. You will receive the loan within four business days.
SoFi requires a minimum score of 680. Moreover, the company requires no origination fee. The company has fixed APRs ranging from 5.99% to 19.96%. There are no late payment charges. However, late payment can lower your scores. The loan amounts range from $5,000-$100,000. The loan term is 18-24 months.
9) Marcus by Goldman Sachs
The marcus by goldman sachs is new in the market, and you can get between $3,500-$40,000. The loan has a fixed APR of 6.99%-19.99%, and the loan duration is 36-72 months. There are no late or origination fees. Your loan arrives within four days. The recommended score for Marcus by Goldman Sachs is 660 and above.
How can you get a personal loan?
Before you get a personal loan, there are things you should consider.
1. Determine the amount to apply for
First of all, run the numbers by yourself and see how much you need for your expenses. You can calculate using a personal loan calculator to determine what you will pay.
A loan calculator gives you an estimate of what you are supposed to pay for a particular period depending on the amount of money you apply for. The personal loan calculator requires you to enter the amount of money you would like to apply for and the duration of payment. Click here for a loan calculator.
2. Check your credit score
Lenders need to check your credit score. No lender will just give a loan without calculating your probability of paying the loan. Different credit scores are suitable for various loans. For instance, personal loans for credit scores under 500 are not the same as those for a credit score of 700 or higher.
Most personal loan issuers require fair to excellent credit scores. Good credit scores increase your chances of getting loans since the banks have confidence that you will repay the loans adequately.
Sometimes credit scores might be different from what you expect. If, in any case, you are not satisfied with your scores, then you can contact credit companies to correct where necessary.
3. Consider different options
Depending on your credit score, you will have different options to choose from. If you have good credit scores, then you can take a loan by yourself. Excellent credit score holders have a guarantee of credit long term loans guaranteed approval Poor credit scores might push you to get a cosigner to help you secure a loan.
Again, you can weigh between secured and unsecured personal loans. For secured loans, you will have to present collateral such as a car or a title deed. Secured personal loans charge lower interest rates as compared to unsecured personal loans. For secured personal loans, the lender might take your item if you fail to pay as agreed.
4. Choose the type of loan to apply for
As I mentioned before, there are various types of personal loans, depending on how you want to use the loan. Some lenders are okay with the general utilization of a loan, while others require you to be specific. You need to indicate whether you need a loan for wedding, medical bills, education, or house renovation.
The last thing is to choose whether you will use a bank, credit union, or online lender. After that, then you can apply.
Do I need a bank account to receive a personal loan?
Of course, you need a bank account to receive your loan. If you cannot open a bank account due to previously closed accounts, you can open a second chance checking with no opening deposit and take a secured personal loan.
Second chance checking accounts help you to rectify previous financial issues as you can improve your scores gradually. Remember that you will pay your loan via the same account.
Personal loans are great alternatives to Payday loans that charge a lot of money as interest to the borrowed amount. If you want to change your house’s physical appearance, pay medical bills, and so on, you need a personal loan. Loans without early or late repayments can be very beneficial as you do not pay much. Above all, you should utilize a loan effectively to avoid repaying a loan that did not help you.