Personal Loans FAQ
How much can you get for a personal loan?
Personal loans are unsecured fixed-term and fixed-rate loans that can be used for nearly any purpose. Loan values generally range from $1,000 to $100,000. The loan amount, fees, and interest rate depends on why you need the money, your credit history including the number of inquiries on your credit file, your current debt to income ratio, and your income stability and work history. Most personal loans are issued in the value of $5,000 to $40,000.
Remember that you are not guaranteed to be given a personal loan even with good credit. Lenders determine the issuance of unsecured debt on a case-by-case basis. Especially if you have a low credit score, you will need to provide a legitimate reason as to why you need to incur the new debt. As an example, it might be the case that you’re looking to use a personal loan to consolidate your debt into one monthly payment. If you demonstrate to the lender that you are going to pay off all of your existing bills, and even close some of the newly paid credit accounts, this could heavily influence their decision to approve your new loan. However, if you have average or low credit, multiple bills that you’re struggling to pay each month, and you’re looking to buy a jet ski, it’s very likely that they’ll turn down your loan request. Being realistic with your loan request is important. A denied loan application could ultimately have negative impacts on your credit score given that the new inquiry will be listed on your credit record.
How does a personal loan from the bank work?
You must first apply for the loan. Application requirements vary among lenders. Upon approval, the lender deposits the loaned funds in your bank account or gives you a check. Personal loans are usually issued for a fixed term of one to five years. Each month, you pay an equal installment to the lender that includes a payment against the principal loan value, fees, and interest charges. After you make all of the term’s payments, the loan is considered repaid.
Personal loans are not revolving debt, meaning that you cannot reuse loan amounts for additional purchases or expenditures as they’re paid in. Revolving debt includes credit facilities such as credit cards, lines of credit, charge cards, and retail credit cards. Revolving debt nearly always carries the highest interest rates, especially if you have missed a minimum payment and triggered a new Annualized Percentage Rate (APR) for nonpayment. Some revolving debt includes multiple triggered APRs for nonpayments. Personal loans generally carry much lower interest and have more favorable terms. The good news about personal loans is this: They are weighed more favorably on your credit record than revolving debt. This is always the case with term debt such as home loans, automobile loans, and other loans that are secured by physical assets. Except in this case there is no collateral. The key is ensuring that you always make your monthly loan payments on time and never miss a payment throughout the term. If you do this, you’ll see your credit score and overall financial well-being will gradually improve over time.
How do you take out a loan from the bank?
Loan application requirements vary among financial institutions. In general, you will need to provide information that proves your identity, confirms your residential address, verifies your income, and addresses your current debt to income ratio. You will also be asked what amount you’d like to borrow and for what reason. Once this information is provided, your lender will check your FICO credit score or your credit score at one of the three major credit bureaus (Experian, Equifax, or TransUnion). If all of the information you provided and your credit score is deemed acceptable, you will likely be issued the loan at a competitive rate. If your credit score is less-than-perfect, you may be approved for a lesser amount, charged a higher interest rate, or denied the loan entirely.
Banks and other lenders are not obligated to give you a loan. Just because you apply doesn’t mean that you’ll be approved for the loan. Lenders base personal loan decisions on risk. Risk is calculated by numerous factors that include your credit score, your debt to income ratio, your employment and income history and stability, the number of inquiries on your credit record, and even more qualitative factors such as legitimate need and whether or not there is an emergency situation involved. That said, you must be honest with all of the information that you provide to the lender. It is very easy for a bank or financial institution to verify your information and identify inconsistencies and potential fraud within your application package.
Can you refinance a personal loan?
Yes, you can refinance a personal loan. If your financial well-being and credit score have improved since you took out the original loan, it is possible that you’ll be able to refinance your current loan at a lower interest rate. In this case, refinancing can save you money and extend the life of the loan to improve your overall household cash flow. Refinancing is a good option if you took out the original loan for debt consolidation, home renovations or improvements, or for a major purchase or expenditure, especially on short notice.
Refinancing debt is a potentially smart way to manage your debt. In some instances, people with an especially high initial debt have refinanced their debt multiple times to save money while paying down the debt. This money is saved through improved fees, interest rates, and the fact that the debt is spread out over an additional period of time each time the debt is refinanced. However, it takes a bit of managing yourself to appropriately utilize the refinancing option. You need to ensure that you’re not overextending yourself on your other open credit lines while you pay down your refinanced debt. Creating the burden of debt is a personal choice. So, if you’re lucky enough to obtain debt refinancing, be smart with your money and get yourself on track before taking on new debt or making potentially wasteful purchases. Maintaining a low debt to income ratio and an above average or high credit score is a sign of personal maturity and great discipline.
Can you get a loan with bad credit?
Yes, you can get a loan with bad credit. However, you should try to fix your credit prior to applying for a loan. If time is of the essence, online and alternative lenders are an option to immediately get the money you need. It’s likely that these lenders will charge you higher interest rates and fees given that your risk of defaulting is much higher. Be wary of immediately heading to a payday lender for a loan. Payday lenders charge extremely high interest and fees.
There are some instances where bad credit is unavoidable. You may have lost your job for a period of time, or some other emergency made it impossible for you to pay your bills. You’re not alone and these things do happen. In too many instances, creditors are just unwilling to agree to a new payment plan or terms that would see them paid over time and your credit saved. But, on the day to day basis, having bad credit is a personal choice. You personally choose what you spend and whether or not to pay your bills. So, the first step to rebuilding your credit is making a personal choice to do so. You must choose to not spend unwisely, you need to quit being wasteful, you need to learn to say no to yourself and those around you, and you need to live within your means. Only then can you begin to repair your credit and enjoy what a strong credit record can bring you in the future. It takes discipline.
Signature Loan FAQ
What is the definition of a signature loan?
A signature loan is a loan that is issued to you in good faith. The loan is not collateralized by any personal property and by this definition is unsecured. A signature loan may or may not be co-signed by another person. This is determined by your credit score and other mitigating factors such as your personal character, current debt to income ratio, income and employment stability, and the number of inquiries on your credit account. Signature loans may be used for home repairs, improvements, or renovations, weddings or honeymoons, major purchases and expenditures, a vacation or holiday, or other unforeseen expenses. Depending on your credit and financial situation, you may be able to get a signature loan at a very competitive interest rate over a fixed term of two to five years. Annual Percentage Rates (APR) can be as low as 2.29%. The key to being approved for a signature loan is demonstrated consistency in managing your finances over a long period of time. If you have a low credit score, it is very unlikely that you’ll be approved for this type of loan, but there are other types of loans available to you.
Can you get a signature loan with a low credit score?
It is very unlikely that you’ll be approved for a signature loan if you have low credit. Signature loans are unsecured and very few lenders will risk lending you money if you have a history of missing payments, non-payment, debt consolidation, credit seeking, and other questionable personal financial practices. Signature loans are mostly reserved for people who have above average credit scores and demonstrated continuous growth in their financial well-being.
Now, that’s not to say that you can’t get yourself to the point of being approved for a signature loan. But, it’s going to take some time and discipline on your part. First, the best thing you can do is never miss a payment with your current debts and always pay on time. If you have multiple high interest debts, you might consider a debt consolidation loan. These loans have a different approval process that is tailored to bringing your debt together under one loan. This normally includes a lower interest and monthly installment payment, easing the pressures of your current debt (but, not necessarily getting you out of debt faster). If you responsibly manage this loan and pay it off, it’s very likely that your credit score will improve over time and allow you to take out a signature loan. You can also repair your credit with a professional provider. There are normally multiple packages available that help you target a certain score and take the proper actions to reach that goal.
How do you know if you qualify for a signature loan?
Many lenders now have a pre-qualification tool that allows you to check your eligibility for a signature loan without affecting your credit record with a new credit inquiry. This tool's form will normally collect information such as your name, address, Social Security number, annual income amount, and your rent or mortgage information. Normally, you will be notified of any available loan offers and a preapproval immediately upon submitting the requested data. If loan offers are made available, you will be able to immediately apply for the loan. However, please note that you will need to provide a certain amount of documentation to verify the data that you provided in the actual loan application. It is good practice to have this information available prior to applying for a loan, especially your annual W-2 form or three months of pay stubs.
Ensure that you check your credit score for free before applying for a signature loan or even using a loan preapproval tool. Knowing where you stand and applying with the right type of lender from the outset will save you time. It is also important to make sure your pre-qualification application doesn’t count as an "hard inquiry" on your credit record. Pay special attention to the disclaimer notice and application agreement prior to submitting the request to ensure that this is case.
What is the difference between a signature loan and a personal loan?
A signature loan is an unsecured personal loan, meaning it’s not secured by any type of physical property. However, unsecured loans are the most commonly issued personal loans, so the terms are used interchangeably. Many lenders have personal and signature loans, and signature loans may be given more prestige than personal loans for marketing purposes. But, they both work the same way: You are approved by the bank, you are issued the loan amount with a fixed term and interest rate, and you pay a monthly installment to the bank that includes a portion of the principal loan amount, interest, and fees. Once you have made all of the payments on the loan, it is considered paid off. You can benefit greatly by taking out a signature or personal loan in that if you make your monthly payments on time and never miss a payment, your credit will improve over time. Like home equity loans, personal and signature loans carry more weight than revolving lines of credit such as credit cards, charge cards, and revolving lines of credit.
Debt Consolidation FAQ
How do you consolidate debt?
Debt consolidation means taking most or all of your current debt, which is usually high interest, and combining it under one fixed term loan with a lower interest rate. Once you combine your bills under one loan, you make equal monthly installment payments against the loan that includes a portion of the principal loan amount, fees, and interest. This normally allows you to pay off your debt faster as long as you’re not incurring new debt on the credit lines you cleared with the debt consolidation loan. Debt consolidation takes discipline given that it’s easy to fall into old spending habits and run up new debt.
Getting a debt consolidation can be as simple as visiting your current bank or a local credit union. It should be especially easy if you have a decent credit score and a stable employment and income history. In some cases, you might be required to have a cosigner for your loan. But, given that you’re clearing other debt, banks tend to be more forgiving when issuing these loans if you’ve shown consistency with your financial management in the past. Be sure to shop around for the best rates possible. Every loan’s terms are different, so it is important that you get one that is the right fit for your situation. Be wary of high interest rate loan “chop shops” that try to drag in good and average credit business with initial low interest rates and other gimmicks that balloon over time. You do not want to end up paying more than you would have if you had just cleared your debts individually.
Is it a good idea to get a debt consolidation loan?
Debt consolidation can be a great idea if you’re disciplined. It is much easier to have one loan to make payments on than managing multiple debts at the same time. It is also likely that the consolidation loan will have lower interest and monthly payments. Consolidating your debt may also improve your credit score, given that your credit cards and other lines of credit will be cleared. The key here is minimizing your spending on your cleared credit cards and other credit lines until you have paid off the new loan.
Best advice: If possible, close some of the credit lines you clear with the debt consolidation loan. This means you won’t be able to spend on the newly available credit. It is very tempting to go back to your old spending habits once you see several thousands of dollars available for your use. If you’re an impulse buyer, this is the best way to ensure you manage yourself as much as you’re trying to manage your money. If you don’t want to close the credit lines, set lower limits for yourself and any additional cardholders. This doesn’t mean you’ll lose the line that you currently have, you’ll just limit what you can spend at any given time. Limits can be set on the available balance itself, or just limit spending on a daily or monthly basis.
How does a debt consolidation loan work?
The best debt consolidation loans are unsecured personal loans. However, additional options may include loans from debt relief companies, a credit union, your bank, a home equity lender, or another financial agency. The goal is obtaining a loan that is large enough to pay off all of your debt. This way you pay off all of your existing bills and then make one monthly payment to the new loan. The new loan will be likely be lower interest and have a fixed term. You make monthly installment payments against the new loan that includes a portion of the principal loan value, interest, and any lender fees. Once you have made all of the loan term’s required payments, the loan is considered paid off and you are out of debt.
Like any other loan, you’ll need to provide a certain amount of information during the application and approval process. This information normally includes your full name, residential address (with verification), your date of birth, your Social Security number, your employment and income data, and other details regarding your rent or mortgage and current debt. Once received, the lender will review your debt to income ratio and determine which loan you qualify. Please note that you are not guaranteed to be approved for any loan you apply for. So, choose wisely when determining which loan you may be approved for. Pre-qualification processes are always a helpful way to gauge whether or not you’ll be approved without affecting your credit rating. Be on the lookout for lenders with this type of service.
Can you consolidate debt with bad credit?
Yes, you can consolidate debt even if you have bad credit. Don’t be in a rush to head to a payday lender or other disreputable lenders before fully considering your options. There are specialized debt consolidation lenders that work with people that have average or less-than-perfect credit. One of the most up-and-coming options is Peer to Peer (P2P) lenders, where people can lend money to you via a managed lending platform. This type of lending platform generally has lower credit score thresholds than conventional banks or credit unions. Everyone’s financial situation is unique. No matter which lender you choose, ensure they show you multiple options and how each one works.
Be serious with yourself if you have bad credit and are seeking out a consolidation loan. It’s important that you take some “personal stock” about your financial situation and take the necessary steps to live within your means and get your debt under control. This is not easy and nearly everyone goes through a time like this at some point in their life. But, that’s not to say that you can’t get through it. If you take out a consolidation loan and remain disciplined with your spending, your credit will improve over time and you’ll have new consumer credit opportunities available to you and your family. There are so many rewards that come from having good credit, most of which is piece of mind at the end of everyday. Stay positive, make your payment on time every month, never miss a payment, and you’ll be on the road to being debt-free and a high credit score holder.
Where can you get a loan to consolidate my debt?
Reputable banks and credit unions should be your first stop when considering a debt consolidation loan. This means you are able to leverage your existing relationship with your financial institution to achieve your financial and credit goals. However, in the event you are not approved for a conventional bank or credit union personal loan, there are many specialized lenders that deal with credit card consolidation and debt consolidation loans. These lenders include Peer to Peer (P2P) and other online lenders that are generally able to fund loans with 1-2 days. In most cases, you are able to get an instant approval from these lenders.
You should avoid payday lenders at all costs. Many states have placed caps on loan values, interest rates, and fees so you don’t end up in a situation where you’re having to get an advance on every paycheck in the future just to keep your head above water. Payday lenders don’t work well for debt consolidation anyways. But, be forewarned in case a payday lender tells you that their lending options can help you get out of debt. They simply can’t. Preferred lenders are banks, credit unions, and online lenders such as P2P platforms. If you have even decent credit, it’s normally easy to get a loan from one of these sources. But, remember that there are options out there for less-than-perfect credit score holders. You just need to shop around for the best options.
How can you get a low interest personal loan?
Those with an above average or good FICO credit score (over 650 or 700) can more often than not secure a low interest debt consolidation loan. These rates can be as low as 4.9% Annual Percentage Rate (APR). Also, if you take out a home equity loan to fund your debt consolidation, this could also lead to reduced rates given the physical collateral on the loan. If you have less-than-perfect credit, you can expect your APR to range 10% up to 30%.
For the most part, debt consolidation loans will have lower interest rates than the debt that you’re consolidating. The type of debt that is usually consolidated includes credit cards, charge cards, retail cards, medical bills, and other debt that typically has a very high APR. For example, there are credit cards being promoted that have an introductory rate of 5.99% APR. But, if you spend past a certain limit (usually noted in the famous “fine print”), this triggers a new rate of 29.99% for life. That means for every $100 of balance you keep on your credit card, you’re pay $29.99 of interest every year! Imagine if you were carrying a balance of $10,000 on a card that had that fine print!
Unsecured Loans FAQ
What is an unsecured installment loan?
Unsecured installment or revolving loans are also sometimes called personal, term, or signature loans. They can be used for many purposes such as a major purchase, credit card consolidation, a holiday or vacation, medical expenses, or to pay for college tuition or other education expenses. There is no collateral required for these unsecured loans and the terms range from one to five (1-5) years. Upon approval, the lender deposits the loan funds in your account. You then repay a portion of the principal loan amount, interest, and fees on a monthly basis. When you have made all of the equal monthly installment payment for the loan term, the loan is considered paid off.
Unsecured installment lenders include banks, credit union, online lenders, alternative lenders, and Peer to Peer (P2P) platforms. Interest rates can range from 2% to nearly 30%, depending on the type of lender utilized. Banks and credit unions will have the lowest term loan interest rates and are the best option for borrowers with good credit. Online, alternative, and P2P lenders are more willing to work with people with less-than-perfect credit but their Annual Percentage Rates (APR) will be higher. Shopping around for a loan is the best way to ensure you get the loan you want and competitive interest rates and terms.
How do I get an unsecured loan?
If you have a high credit score, obtaining an unsecured loan is an easy process. If you have bad credit, there are still lending options available to you but at a higher interest rate. Generally, the process for obtaining an unsecured loan includes:
- Checking your credit score.
- Improving your credit score by paying down your debt and regularly making payment against all of your credit accounts.
- Improving your debt to income ratio is important (i.e. how much you owe versus how much you make).
- Use sites such as ours to shop around for the best interest rates and protect yourself from disreputable lenders.
- Submit a loan application with a major bank or credit union if you have a good credit score.
- Apply for an unsecured loan from an online lending company if you have a low credit score.
- Submit your application including proving your identity, providing a confirmation of your residential address, verifying your income, submitting information about your current debt, creating security questions, specifying the amount you want to borrow, and understanding your debt to income ratio.
- Repay the loan. You must understand the loan’s repayment options. Choose an amortizing loan for regular monthly payments. There are also options for interest-only loans (where the lump sum is paid off at the end of the term). Balloon payment loans may also be available if your currently monthly income is low.
- Pay your loan on time and avoid late fees. Understand prepayment penalties and be certain to avoid accidental overdrafts in your checking account.
How can I borrow money with bad credit?
There are many ways to borrow money if you have bad credit. Secured, unsecured, and alternative loan options include:
- A credit union loan.
- A Peer to Peer (P2P) loan or unsecured loan.
- A secured loan such as a home equity loan, automobile title loan, or pawn shop advance.
- A revolving line of credit.
- An existing bank account overdraft facility.
- A credit card cash advance on cards.
- A payday loan (not recommended).
- A tax refund loan.
- Borrowing money from a friend
Not all personal lending options work for everyone. They depend on employment history, debt to income ratio, past and current asset, and other credit factors. However, there are generally always options available for everyone, though some may be less than desirable than others given loan terms, interest rates, and fees. It is important to always shop around for a loan that is going to work for you. There is no point in taking out a new loan if it is only going to create additional burden and worsen your overall financial situation. Also, be sure sure to stay away from payday lenders. Many states have recently placed limits on these businesses to curb their predatory lending practices of targeting low income citizens who are living paycheck to paycheck. Once you get into a cycle of advancing your paycheck, it is very difficult to get out of it given the very high interest and fees you’ll be paying on each check.
How do you get an unsecured loan with bad credit?
To get the best rates on an unsecured loan, you usually need to have a good credit score. If you need a personal or unsecured loan and you have bad credit, there are still options available to you. However, fixing your credit while working to obtain a loan is the best idea.
To obtain a loan with bad credit, you will need to find a specialized lender who works with people with less-than-perfect credit. You should be aware that you’re likely going to pay a higher Annualized Percentage Rate (APR) on the loan as well as additional fees to offset the lenders risk. You also may not be approved for the full amount that you’re looking for.
Once you have identified the loan that is most suitable for you and you have used their pre-qualification tool to determine whether or not you’ll be approved, you need to submit a full application. Be sure to have your W-2 form from the last tax year or your pay stubs available as well as our Social Security number, proof of address, and details regarding your mortgage, rent, or other debts available. These will be needed during the application process.
Your loan will then be approved by the lender and the funds will be deposited in your account. You will be expected to make your monthly installment payment that includes a portion of the principal loan amount, interest, and fees on time every month. Do not miss a payment or default on the loan as this could heavily affect your credit score.
Wedding Loans FAQ
How much does it cost to have a wedding?
Wedding costs have never been higher. The national average cost for a wedding in the United States is estimated to be about $33,000, though most weddings range between $20,000 and $40,000. More extravagant weddings that cater to extended networks of family and friends can easily cost over $100,000. It is best to start saving for your wedding early and it is a great financial planning exercise for you and your soon-to-be spouse. It is not good form to take out a personal loan or revolving line of credit to cover all of your wedding costs. This approach would put you and your new partner in debt from the very first day of what is supposed to be your new life together. It is very important to consider your priorities for the future given that you might have new expenditures such as a new home, an additional car, the potential birth of a child, or other expenses that didn’t exist when you were in a dating situation.
Can you get a loan for a wedding?
Most lenders don’t advertise an actual “wedding loan” per se. However, most lenders are willing to issue unsecured debt to cover wedding costs if you have a decent credit score and a history of sound financial management. The key here is having some savings to offset your wedding costs and augmenting those savings with the additional credit. If you have average or even bad credit, there are still lending options open to you. However, if you borrow from online lenders or Peer to Peer (P2P) lending sources, you can expect to pay a much higher Annualized Percentage Rate (APR). Be sure to shop around before committing to a loan. Especially if you have a strong credit record, lenders will be eager to get “expensive money” in front of you. Though you could potentially refinance this debt in the future, it is still going to cost you more money than if you just saved for your wedding. Your “big day” shouldn’t put you into heavy debt. Be realistic with your expectations and throw an event that matches your financial situation as well as your personal goals (i.e. bringing together your family and friends for the celebration, not the selfie opportunities).
Medical Loans FAQ
What is a medical loan?
Most banks and credit unions don’t advertise a “medical loan.” Medical loans are simply unsecured personal or signature loans that are taken out to fund a medical, surgical, dental, or surgical treatment plan that is emergent, elective, or cosmetic. If you need to borrow money to pay for medical services, explore the many unsecured loan options offered by conventional financial institutions. If you have average to good credit, a solid credit history, a low debt to income ratio, and stable employment and income, applying and being approved for a loan should be relatively simple.
Some alternative lenders such as online loan marketplaces and Peer to Peer (P2P) lenders offer loans that are specifically geared towards medical costs. Some companies offer only medical loans. It is important to shop around for the right loan or line of credit for you given that these lenders generally have higher fees and Annual Percentage Rates (APR). If you have less-than-perfect credit, online and P2P sites might be the best option for you. They have a less strict approval process than regular banks and credit unions. But, again, you should shop around your loan requirement to ensure you get the best deal possible.
How do I apply for dental care credit?
Many online lenders are joining the medical credit business. Lenders are partnering with local healthcare professional offices such as medical clinics, dental offices, and optometrists to provide medical financing that you can apply for onsite. In some cases, credit is being offered at very competitive rates. But, there are some lenders that charge exceptionally higher interest rates and fees. You need to be cautious about what loan you choose to fund your required medical services.
Some of the more reputable providers include the AccessOne MedCard, the Citi Health Card, the Wells Fargo Health Advantage Card, and iCare Financial. Prosper Marketplace is also offering medical lending options though this is a relatively new service. If possible, work with a reputable bank for your medical credit line. With these lenders, you will get the best Annual Percentage Rate (APR) and terms. Also, prior to applying for credit, check to see if your health insurance provider covers all or part of the cost. Combining your health insurance, with your own cash savings, and offsetting the balance with a smaller unsecured loan is the best way to pay for professional healthcare if you’re not fully covered by your insurer.
Can you get finance for IVF?
Some states require by law that infertility benefits be available. You should see where your state stands on this issue given that In Vitro Fertilization (IVF) may be fully or partially covered by your health insurance plan. However, if you’re not covered, some lenders are now offering IVF-specific loans up to $100,000 that cover medications, procedures, and treatments for male and female reproductive disorders, ICSI, IUI, and other related medical treatments. Given the high costs with such treatments, many lenders are offering excellent terms over long periods of time. It is important to shop around for the best loan to meet your IVF goals.
What is a medical credit card?
Nearly every medical office throughout the United States offers medical credit cards provided through third party lenders. Whether you require medical, surgical, cosmetic, dental, therapeutic, or even veterinary services, financing options are available. Maybe you need emergency dental work such as a crown? Or, maybe you’d like a “nose job” just because you want one? Online and Peer to Peer (P2P) lenders are entering the loan marketplace and offering “medical credit cards” to ensure you have the cash available to undertake procedures.
It is important to do your research when deciding on which medical credit card is right for you. Many online and P2P lenders charge high fees and interest, or have ballooning interest over time. Be sure to read the fine print of any credit card application and agreement to ensure you’re not being pulled into a financial arrangement that will become very expensive over time. If possible, the best option for medical financing is an unsecured personal or signature loan. However, if a medical credit card is your only option, shop around for the best deal for you.
Holiday Loans FAQ
What is a holiday loan?
A holiday loan is an unsecured personal or signature loan that is used to bridge your cash needs during holiday seasons such as Christmas, Ramadan, Hanukah, Thanksgiving, and Eid. Holiday loans can be used for all types of purposes such as paying for a vacation, buying gifts, hosting family events and gatherings, or other travel to see loved ones or friends. Many households in the United States describe holiday seasons as financially stressful periods. Being stressed out is not how you should spend your vacation time or the months following it. Responsibly utilizing a holiday loan can ease your financial burden and be structured in a way that it is easy to pay off over time at a competitive interest rate.
When taking out a holiday loan, you should be realistic about what your cash needs really are. Create a budget for the holiday and only apply for an amount that you are truly able to afford. It is very easy to get into heavy debt during the holidays. Credit is available everywhere: Loans, credit cards, charge cards, retail cards, revolving lines of credit, and payday loans are all options. But, if you set a limit for your spending and take out a loan amount that you can 100% pay down on time every month over a set term, an unsecured loan might be a good way to get the most out of your vacation. However, be sure to manage your expectations and those of your family to ensure you’re not living beyond your means.
Can you get holiday loan with bad credit?
Yes, you can get a holiday loan with bad credit. There are many lenders available today that work with people with less-than-perfect credit and can fund unsecured personal loans in as little as 24 hours. It is however advisable to be realistic about your financial position and manage your expectations accordingly. All too often, people put themselves into debt that they can’t handle. You need to understand your household finances, your debt to income ratio, and ensure that you can afford a loan that you’ll have to pay over time, with a high interest rate, fees, and a set repayment term. Remember, you’re creating a new long-term bill for the purpose of some short-term holiday gratification. Ask yourself whether or not you really need to buy so many gifts, or if you require that vacation to some exotic destination. The “knee jerk reaction” is to say yes. But, if you build a simple pros and cons table, you might find that staying home and being a bit more frugal is the priority for the time-being.
Stay away from payday lenders. Many states have put caps on various aspects of these loans because it’s easy for those living paycheck to paycheck to get sucked into living paycheck advance to advance. Payday loans are very expensive in interest and fees. And, recovery of the loan funds in the event of nonpayment can be relentless. You do not want to end up in a situation where your bi-weekly or monthly check is being garnished in part or in full to cover off the debt.
What can you use a holiday loan for?
Given that a holiday loan is essentially an unsecured personal or signature loan, you can use a holiday loan for any expense. You might want to fly somewhere for the holidays. Or, maybe you want to pay for air tickets for family members to visit you. Maybe you’re looking to go “all out” and stuff the bottom of the Christmas tree with tons of toys for your children. A holiday loan can be used to make these things a reality. But, as always stated, be smart with your money. What’s the point of running yourself $30,000 into debt for two weeks of “joy” if you’re just going to be miserable for the other 50 weeks of the year. Financial strain is one of the biggest contributors to household and family issues. Holiday loans are a luxury. So, is the luxury really worth sacrificing your family’s happiness throughout the year, or even your marriage, if you can’t afford it? Manage your household expectations during the holiday season. If you have some cash saved up, maybe take a trip that is closer to home with that cash only. Or, use some of the cash to offset what you’ll have to spend on credit cards or using a holiday loan to make the preferred trip happen. Putting everything on credit isn’t a viable option. Financial responsibility and maturity means saving up for your holiday wants just as much as it means being able to take a loan and make the payments on time.
Emergency Loans FAQ
How do you get an emergency loan?
Emergency loans are unsecured personal or signature loans and are available from most banks, credit unions, online lenders, Peer to Peer (P2P) platforms, and other financial institutions. Emergency loans are reserved for individuals and families that are facing a real crisis. This may be due to a natural disaster, emergent medical issues not covered by health insurance, or other situations in which you might need cash immediately. Though strong financial plans always contain some sort of emergency fund, these loans can be used to augment such savings.
To obtain an emergency loan, visit your bank’s website and research your options. Alternatively, shop around for loans offered by other online resources such as a P2P platform. As with any unsecured loan, you will need to provide information such as your full name, date of birth, residential address, Social Security Number, employment and income information, other debt data, and possibly details regarding your monthly mortgage or rent commitments. Upon initial approval for the loan, you will likely need to provide a pay stub or tax return, a utility bill, and copies of your identification to verify the information you provided. Once all items have been received and you obtain final approval for the loan, funds could be deposited in your account within 24 hours. To ensure the fastest approval, ensure that your information is accurate and complete.
What can an emergency loan be used for?
An emergency loan can be used for nearly any type of real emergency. This could include repairs to your home following a natural disaster such as a tornado, an emergency medical procedure that isn’t covered by your medical insurance, or even dental work. Emergency loans can also be used to pay for shortfalls in your college tuition, emergency travel in the event of the death of an immediate family member, or paying for a funeral.
If you have a strong household financial plan, monthly saving to an emergency fund is likely something you already do. An emergency loan is meant to augment these savings. It is a good idea to work through potential issues that you or your family might face over the next 5 years and save accordingly. Save up enough money to pay for the most expensive potential emergency. Or, determine the mean of all of your potential emergencies and keep at least that amount in savings to help pay for the event if it occurs. Most banks will provide you with an emergency loan if you’re able to demonstrate that you’ve tried to account for emergencies in your savings, even if you have an average or low credit score.
Are emergency loans unsecured?
Most emergency loans are unsecured personal or signature loans. However, in the event you need to borrow a larger amount of money, you may have to put up collateral such as your home or car. Saving for an emergency fund is an important part of any household financial plan. You should be dedicating a small portion of your monthly household earnings for potential emergencies you or your family might face. Even if you have an average or low FICO score, most banks will allow you to take out a reasonable emergency loan if you can demonstrate that you’ve been saving for such emergencies on a regular basis.
Many lenders now market unsecured emergency loans. However, be cautious and shop around for your loan if time allows. Online lenders and Peer to Peer (P2P) lending platforms will always have higher interest rates and fees. Though they might be more convenient if time is of the essence, you will likely end up paying much more for the convenience when compared to banks and credit unions.
Payday Loans FAQ
Who are payday lenders?
Payday lenders are companies that essentially offer you an advance on your next paycheck. This is a cash advance that usually ranges from $50-1000, depending on your biweekly or monthly earnings. To obtain a payroll loan, you can apply online or visit one of the many payday lending stores in your local area. You will be required to show valid identification, proof of residential address, your Social Security Number, and your most recent pay stubs. Some lenders also require that you submit a post-dated check or Automated Clearing House (ACH) details so they can immediately draw your payment when the loan due date arrives. Once approved (which is normally within minutes), you're given a check for the loan amount or the funds are transferred to your bank account. On the due date, your check is cashed or your account is debited for the loan principal plus any fees and interest charged. You may also visit the issuing payday lending shop and pay the loan in person.
Payday lenders have recently come under fire for usury practices. This means that excessive interest rates and fees were being charged on small value loans, thus catching the borrower in a "payday lending cycle." Recently, many states have enacted new legislation targeting these predatory lending practices, though many lenders are still getting around these laws by using out of state banks to support their operations. It is very important to do your research before taking out a payday loan. If you're already living paycheck to paycheck, you do not want to end up living cash advance to cash advance.
Do payday loans show up on your credit report?
Loans taken out from a payday lending store do not appear on your three bureau credit records (TransUnion, Experian, and Exquifax) or affect your FICO score. But, these loans may be internally tracked by the lender or by specialized credit reporting agencies working on behalf of the payday lending industry. However, in the event of non-payment, it's very possible that the loan will be sent into collections, and this would be noted on your credit report (thus significantly lowering your credit score). The rule here is this: If you take out a cash advance, pay it back on time and avoid issues. Given the generally small values of these loans, it isn't worth further risking your financial and credit stability for a potential instance of non-payment.
Can you go to jail for not paying back a payday loan?
You cannot go to jail for not paying back a payday loan. However, it's a good question because these types of threats have been used by payroll loan and salary loan providers in the past (and, it likely still happens on occasion). It is illegal for a payday lender to threaten you with jail, criminal action, or physical repercussions in the event of non-payment. Most notably, if you are ever physically threatened by a payday lender (or, anyone for that matter), your first call should be to your local police department to report the incident.
Small dollar and cash advance lenders can pursue non-paying borrowers through civil proceedings in a court of law. These lawsuits can lead to the garnishing of the borrower's wages and liens against their accounts. Lenders can also preempt legal proceedings by escalating the unpaid loan to their preferred collections agency. It's often the case that these agencies will work with you to either settle the loan or set up a payment plan that is acceptable to both parties, avoiding a potentially unnecessary lawsuit and the related additional costs.
Can they garnish your wages for a payday loan?
Like any other creditor, the option always exists for a payday lender to sue you for non-payment of a payday loan. This is a legal way for a creditor to pursue collection on the loan through civil court action. The result of this civil lawsuit could be a judge's order to garnish your wages. This means that the court would rule in favor of the creditor and a judgment would be issued instructing your employer to pay your wages (or, a portion of) to the creditor until the amount listed in the judgment was satisfied. It is very often the case that the court's order would take precedence over all of your other obligations, including normal day-to-day living expenses. So, a garnishment could also mean that you lose all of your earnings until the payday loan is repaid in full. This could potentially be catastrophic for you and your family, and another great reason why it is so important to carefully consider payday loans and instead properly manage your personal finances.
Credit Repair FAQ
How much does it cost to repair your credit?
Credit repair costs differ among service providers. For the most part, credit repair services charge a monthly subscription that ranges anywhere from $20 to over $200 per month, depending on the services you're looking for. Fixing your credit isn't an overnight endeavor. It takes time and patience. And, if you're not willing to go through the pains of disputing items on your three bureau (Equifax, TransUnion, and Experian) credit reports yourself, hiring a company to take on this task is definitely an option. But, remember: You're hiring someone else to do something you can do yourself, and you're now burdened with the additional cost. If you're serious about repairing your credit and learning from your mistakes, the best thing you can do is to do it yourself. How? Simply obtain your credit reports from all three credit reporting agencies, identify issues such as high credit balances and aged inquiries, and start paying down your debt and/or request the credit agencies remove the old inquiries. Believe it or not, it's that easy! We'll be writing a blog article about this soon. There are even more ways that you can improve your credit by actually using certain consumer credit products!
Can you fix your credit on your own?
The answer is yes! Actually, the best way to fix your credit is to do it yourself. Why? Because you get to see all of the mistakes you've made, correct them, and feel good about making a positive change in your life. Simply request your credit reports from all three credit reporting bureaus (Experian, Equifax, and TransUnion). Review the reports, looking for high credit balances and aged inquiries (12 months or more). Start focusing your repayments on the high debt items and request that the agencies remove your aged inquiries. And, voila - your credit score will improve! Just know that this is not going to happen overnight. Credit agencies generally take 2-3 months to remove an old credit inquiry. And, repayment of your debts depends on you and how you manage your money and yourself. So, treat your credit like your health, especially when you're sick - take the right steps to get back on track, nurse it back to health, and then proactively maintain it going forward.
Does credit repair work?
Of course it does. That's the beauty of credit - it won't always stay average or even bad if you just put in some effort to improve and maintain it. Your credit score is determined by your actions alone. If you manage it poorly, you'll have a low score. If you take care of it and your finances as whole, it will be great. What you put in is what you get out. And, unlike some other countries, maintaining even decent credit in the United States is easier than you think. It's just a matter of self-discipline and a bit of common sense (i.e. don't spend what you know you can't pay back).