In life, timing never seems to work the way you want it to; just when you get the chance to take a dream vacation, your heating goes out. While your dreams evaporate into freezing air, you’re left wishing that you had the funds available to take care of your responsibilities without giving up on the fun. What if we told you that you can do both?
A personal loan gives you the opportunity to experience the financial flexibility you need to consolidate your debts, take a dream vacation, pay off medical bills or make a large purchase that can improve your life. At Squeeze, we’ll help you learn how to compare personal loan options and navigate through the personal loan process so you can take a vacation or pay off your debt.
What is a personal loan?
A personal loan is a loan that is made to an individual. These loans have similar terms to an auto loan or mortgage, but the proceeds of the loan are not earmarked for a particular purchase. The flexibility of a personal loan makes this an ideal option for people who need to pay off several small debts or a larger debt that has unfavorable terms.
Depending on the interest rate and number of payments required under the loan terms, a personal loan can also be a reasonable option for funding one-time opportunities like a vacation, education or a major purchase. Since personal loans are easier to plan and budget for than other options like credit cards, these loans are perfect for funding unique opportunities.
How do personal loans work?
If you apply for a personal loan and get approved, the funds will be deposited directly into your bank account. Unlike credit cards, personal loans allow you to access cash funds that are available to you as soon as the loan is disbursed. You can withdraw the money from your bank account as you would any other funds, and there is no restriction on how you spend the money. Since there is no line of credit, you do not have to worry about going over the limit.
What is the process?
Once you have decided that you would like a personal loan, the first step is to fill out an application. The application will ask for personal information including your name, address and phone number. Additionally, the application will need financial information such as your annual income to determine how much you can borrow and the loan terms.
After you submit your application, you will receive a notice advising that your application was either accepted or rejected. If the application is accepted, you will need to read over the loan terms and sign to acknowledge you accept these terms. Your loan funds will be deposited into your bank account within a few days after the paperwork is completed.
How do I apply?
The first step to applying for a personal loan is to be familiar with your credit. The terms of the loan and the amount you can borrow will be partially based on your credit history. Checking your credit history before you apply for a personal loan gives you the opportunity to resolve any issues on your report.
The next step is to collect any information that may be requested on the application. Personal information may be readily available, but you will also need to know your household income. Most lenders will want you to list out all of your debts on the application. Reviewing your debts and your income information gives lenders the opportunity to more accurately determine how much you can afford to borrow.
It is important to remember to compare your loan options before applying. Look closely at the loan terms and conditions.
Can I get a personal loan online?
One of the best features of a personal loan is that you can complete the entire loan process online. Many lenders let you know their decision within a few minutes, and you could have the personal loan funds in your bank account within one business day. The exact length of the application process depends on the lender, but applying for a personal loan online is the fastest way to obtain a loan to pay off debts.
Why was my loan application rejected?
If your loan application has been rejected, don't panic. Common reasons for rejection include a high debt-to-income ratio, poor credit history or not enough income to cover loan payments. If you have been rejected by one lender, it does not mean that all lenders will reject your request. You can try another lender or lower the amount you are requesting to improve your chances of approval.
Additionally, it is a good idea to review your credit report after a loan rejection. If the lender rejected your application due to poor credit history, the lender must send a list of reasons for the rejection and your numerical credit score. This information will help you pinpoint the reason for the rejection so you can try again after resolving the issues.
Where can I get the best personal loan?
There are plenty of personal loan choices out there, but finding the best loan to meet your needs requires a bit of research. Every lender sets their own terms, and differences in terms can mean a big difference in the amount you pay in the end. Everything from interest rates to origination fees change from one lender to the next.
Instead of looking at every lender's website and digging for information about loan terms and interest rates, the information is presented up front in a format that makes it easy to pick out the best loan for you. You provide a few details about yourself and the amount of money that you want to borrow, and we list the lenders that are most likely to approve your loan request. As a result, you find the best personal loan while saving time.
Who are the best lenders?
There are lots of different lenders out there, so how do you know which one is the best? The fact is that each lender has its strong points and its negatives. Some lenders let you complete the entire application process online, and the money you are borrowing can be in your bank account within one day. Other lenders take longer to review your application and deposit the proceeds of your loan into your account, but these lenders may offer lower interest rates.
Consider personal loan options from established lenders that have a reputation for transparency and high approval odds. Our goal is to help you find a trustworthy lender that can meet your borrowing needs. When you compare lenders, you have the option to read additional details about loan terms before you even apply for the loan.
Where can I get the best rates?
The best interest rates keep your payments lower and save you money over the life of your loan, but how do you get those interest rates?
There are several online personal loan comparison tools available precisely for the purpose of saving you the hassle of contacting individual lenders. A comparison tool lets you pinpoint the lenders that are offering the best terms for you - that is, your credit score range, loan amount, etc.
When should I get a personal loan?
If you are struggling to decide whether now is the best time to get a personal loan, you don't have to worry. Whether you want to take advantage of that amazing sale on home appliances, travel to an island paradise or just get the credit card debt off your mind, now is the perfect time to get a personal loan.
If you are getting a personal loan to pay for a specific expense with a set due date, the best time to apply is at least one week before you need the money. Leaving a week of lead time ensures that both the lender and your bank have time to move and release funds in your bank account.
>>Looking for another way to save money? Shop your auto insurance for a lower rate.
How long does the process take?
The exact length of the loan application and disbursement process varies from one lender to another, but you can get money in about one day when you apply for a loan online. Lenders typically provide you with a response regarding your application within a few minutes after an online application, and funds can be deposited into your account the same or next business day.
Depending on your bank, it can take a few days before the funds are available in your account. Even if the lender sends the money within one day, your bank may take longer to process the deposit. If you're depending on the money to pay for an expense with a due date, it's best to give yourself a week of lead time to make sure you have the money you need in time to make the payment.
Can I get a personal loan in an emergency?
Imagine that a member of your family has a sudden medical emergency that requires immediate treatment at a cost you can't afford. Now imagine that you have gotten word that a loved one who lives far away is in trouble and needs you to come see them. If you need money fast to pay for medical bills, travel expenses or an essential appliance that has stopped working, personal loans are the perfect solution.
In the case of an emergency, you will want to choose a lender that offers online applications and immediate approval decisions. These lenders are often able to get money to you within one business day.
Should I get a personal loan to pay off my credit card?
Personal loans are a great option for paying off your credit card debt. Credit cards tend to have high interest rates, and those interest payments add up over time. If you want to save money in the long run, personal loans give you the freedom to pay off your existing debt with a financing option that offers uniform monthly payments. Personal loans are great for people who want to budget their debt payments and form an easy-to-understand plan for paying off debt for good. The clear terms let you see exactly how long it will take for you to pay off the loan. Credit cards often require low minimum payments that drag out payments for years.
Should I use a credit card instead of taking out a personal loan?
Credit cards allow for long-term access to revolving credit, but they are not always the best choice. The biggest reason to opt for a personal loan over a credit card is the fact that loans tend to have lower interest rates than credit cards. In addition, personal loans may offer you more money than a credit card.
If you are trying to keep your finances in order, a personal loan gives you the opportunity to get the money you need right now without having to deal with a long-term account that can be difficult to manage. Once you pay off your personal loan, you don't have to worry about it anymore. When you open a credit card account, you may be more inclined to charge purchases on the account long after your financial needs have been met.
What can I use a personal loan for?
The beauty of a personal loan is that you can use the funds for anything you want. Do you want to go on a vacation across Europe, have the wedding of your dreams or finally buy that new set of golf clubs that has been calling your name? A personal loan brings all of these possibilities within reach. Hoping to pay down debt, buy a much-needed home appliance or pay off a medical bill? Personal loans let you do that, too.
Can I pay off my loan early?
Paying a loan off early means that you cut down on interest costs over the life of the loan. Personal loans can be paid off early, but you will need to review the loan terms before making that final payment. Some lenders charge a penalty for early payoffs.
If your lender charges a penalty, it may still make financial sense to pay the loan off early. You will need to calculate the interest savings you will enjoy from paying your loan off early. Compare this amount to the early payoff penalty, and you will be able to choose the option that saves you the most.
Is there a penalty for early payment?
Lenders want you to pay your loan off as soon as possible, right? Believe it or not, many lenders charge a penalty for early payoff. Lenders count on interest payments to make money off of offering loans. If you are hoping to pay off your loan quickly, it is important to calculate the interest you would save. Compare this number to the early payment penalty to determine whether it is in your best interest to pay your loan off faster than expected.
Some lenders do not charge early payment penalties. If you anticipate paying off your loan in fewer payments than the loan terms stipulate, read the fine print before signing a loan agreement to make sure you will not be paying a penalty.
>>CALCULATOR: Personal Loan Debt Consolidation Calculator
How much can I borrow?
If you are hoping to borrow a large amount of money to finance your dream wedding or a once-in-a-lifetime vacation, you are probably wondering if a personal loan is a viable solution. You're in luck; personal loans range from $1,000 to $35,000. Whether you need to borrow just a bit to pay for a sudden medical bill or a lot to pay off high-interest debts or buy a new car, there is a personal loan that will meet your needs.
Before you decide how much to borrow, it is best to figure out the expenses or debts that you want to roll into the loan. Once you have determined how much you need, you can start searching for the right loan!
Can I refinance a personal loan?
Whether you are worried about a variable interest rate or you want to take advantage of plummeting interest rates, it is understandable for you to wonder whether your personal loan can be refinanced down the line. The good news is that refinancing is an option; however, it is not done in the same way as a refinanced auto loan or mortgage. Instead of getting a new lender to pay off your loan, you will need to apply for a new loan and use the proceeds to pay off your existing loan. Make sure you take origination fees and other fees into consideration when you are calculating whether your new interest rate and loan terms make financial sense.
How are the interest rates calculated on a personal loan?
There are several factors that go into the interest rate calculation on a personal loan. The first factor is market rates. A lender will adjust their available interest rates based on how the market is behaving. However, lenders offer a range of interest rates that vary from one lender to the next.
The exact interest rate that you will get on your personal loan is also impacted by your credit score. People who have excellent or good credit can expect to pay significantly less in interest than borrowers who have fair or poor credit. When you provide information about your credit history, lenders are able to determine the interest rate in their range that will apply to your loan.
What is the average interest rate?
The average interest rate on a personal loan really depends on your credit score. People who have excellent credit may be able to obtain a loan with an interest rate as low as 6 percent. If you have fair credit, your interest rate may be closer to 15 percent. Borrowers who have bad credit or no credit history can expect to pay more in interest. The highest interest rates tend to top out around 30 percent, but there are some lenders that offer interest rates of up to 36 percent. Lenders that offer loans with the highest interest rates are often those that are willing to lend to borrowers who have bad credit.
Is the interest on my loan tax deductible?
Interest on some types of loans is tax deductible, but personal loans do not offer this benefit. The interest on your mortgage, student loans and business loans can be deducted from your taxable income. If you are taking out a personal loan to pay for college, you may want to look into alternate financing options that allow you to deduct loan interest on your taxes.
However, interest on a personal loan is tax deductible if you use the loan for business expenses. If you plan to claim this deduction, you will have to provide proof that the proceeds of your personal loan were used to pay business expenses. Itemized financial records are necessary in this case.
Will my personal loan rates increase or decrease?
The interest rates on your personal loan can change if you opt for a variable rate loan. Variable interest rates change with the market. These interest rates can either increase or decrease. It tends to be harder to budget for variable interest rates. Your loan payment will change as the interest rates change. Variable interest rates can benefit you if rates go down, but you can also end up paying much more in interest if rates rise.
If you opt for a fixed rate personal loan, your interest rate will never change. The interest rate is set at a fixed amount at the beginning of the loan term, and you will know exactly how much you can expect to pay each month.
How does my credit score affect my interest rate?
When you look for a loan, lenders will offer a range of interest rates that are based on your credit score. A higher credit score can save you money by helping you get a lower interest rate. Have you ever wondered why people with good credit pay less in interest than those who have not-so-stellar credit?
Lenders take on some level of risk when they lend money to borrowers. Credit scores are the easiest way for a lender who does not know you personally to determine whether you are likely to pay back your loan in full and on time. A low credit score indicates that borrowers either pay their debts late, miss payments entirely or fail to pay back their debts at all. Lenders might be willing to give these borrowers a chance, but that chance comes at the price of high interest.
The best way to show lenders that you will pay back your debt is to keep making payments on time on your existing debts. Building a better credit history full of on-time payments and debts that are kept under control will help you score a better interest rate. Even if you already have bad credit, applying good habits when it comes to your debt now will help you raise your credit score.
Will a personal loan affect my credit score?
Getting a personal loan will affect your credit score, but the exact impact depends on the total amount you borrow, the loan terms and whether you make loan payments on time each month. Every time you borrow money, the loan or credit card shows up on your credit report. Holding more debt may negatively affect your credit score temporarily, but paying your loan on time can actually improve your credit by building positive credit history. If you adhere to the loan terms, you can use a personal loan to help build credit and improve your score in the long term.
Can I get a personal loan without a credit check?
It is difficult to get a personal loan without a credit check. There are some lenders that offer payday loans without a credit check, but this type of personal loan typically comes with very high interest rates and steep penalties in the case of late or missed payments. In addition, these types of loans tend to be for lower amounts.
However, there are lenders that will offer personal loans to people who have bad credit. If your bad credit is holding you back from applying for a personal loan, use our loan comparison tool to find a lender that is willing to offer loans to people with low credit scores.
Can I get a personal loan with bad credit?
You've checked your credit, and you found out that your credit score isn't good. Are there still loan options for you? The good news is that there are plenty of lenders that will offer loans to people who have made mistakes with their credit in the past. You do not have to resign yourself to the idea that your credit makes you ineligible for a loan.
However, it is important to be aware that bad credit will likely mean that you will be paying a higher interest rate on your loan. When you compare personal loans, you’ll find a range of interest rates available from each lender. If you are approved for a loan, the lender will send you a loan agreement that you will need to review and sign. The loan agreement will outline interest and fees. You can compare the interest rates on several different loans to make sure you are getting the best rate.
People with bad credit may also pay more for their loan origination fee. This fee is charged as a percentage of the amount that you are borrowing. The loan origination fee is taken directly out of the money you are borrowing. For example, a $5,000 loan with a 4 percent loan origination fee means that the amount deposited into your bank account will be $4,800.
Will a personal loan improve my credit?
Immediately after taking out a personal loan, you may see a temporary decrease in your credit score. There is always a bit of adjustment time when your credit history has been pulled by a lender. However, a personal loan can help improve your credit over time.
If you use your loan to pay off your credit cards, your available credit will increase. More available credit means a boost to your credit score. Making your loan payments on time will also help boost your credit score. People who have no credit history or bad credit often find that taking out a personal loan and never missing a payment can help bring their score up.
Can I get guaranteed approval on a personal loan?
You may have seen a lender advertising guaranteed approval on their loans, but is this offer too good to be true? Unfortunately, guaranteed approval is an advertising tool that lenders use when they want to offer loans to people with bad credit at a very high cost. If you apply for these loans, you'll probably end up paying a large percentage of the loan amount in fees and interest.
It is best to opt for a traditional lender that will check your credit and adjust the loan terms based on your credit score and history. If you do not get approved by one lender, you can either try another lender or work on improving your credit before submitting another loan application.
Can I get a loan without a job or salary, or if I am self-employed?
In a world that is increasingly dependent on freelance workers, more people are finding themselves working for themselves. If you fall into this category, you are probably wondering if you can qualify for a loan. Everyone has a unique employment situation, and most lenders will ask for financial records to show that you have been steadily earning money over the past two years.
If you do not have an income at all, getting a loan can be a bit more tricky. You will need to show that you will have the funds to repay the loan. If you are dependent on disability payments, alimony or any other type of income that is not related to employment, you can just submit documentation of these payments to boost your chances of being approved.
Are personal loans secured or unsecured?
Personal loans are a type of unsecured loan. A secured loan is one that requires collateral against the loan. In the case of auto loans and mortgages, the vehicle or home being purchased is considered the collateral that makes the loan secured. Credit cards can be both secured or unsecured; in the case of secured credit cards, the credit card company requires cardholders to send a deposit before the card is issued. Secured credit cards are a common option for people who have bad credit or no credit history.
Personal loans do not require any collateral, so these loans are considered to be unsecured.
Do I need a cosigner for a personal loan?
Whether or not you need a cosigner for a personal loan depends on your creditworthiness. If you have bad credit or no credit history, lenders may ask you to find a cosigner to guarantee the loan payments in the case that you are unable to repay the loan. Borrowers with fair, good or excellent credit are often able to get a personal loan without a cosigner, while borrowers with bad credit have more limited options.
If you do not have a cosigner and are having trouble getting a personal loan, your best option is to work on building your credit before trying to apply for a loan again. Borrowers who need money right away can find lenders that specialize in offering loans to people with bad credit or no credit.
How many personal loans can you have at one time?
There is no set number of personal loans that you can have at one time. However, lenders will take your current debts into consideration when deciding whether you qualify for a loan. If you are already holding a personal loan, lenders will look at your income and overall debt to determine whether you can afford to take out another loan.
You can also apply for more than one loan at the same time. Borrowers who need money quickly and are unsure that they will be approved for a personal loan often try applying for multiple loans at the same time. If you choose to apply for multiple loans, you do not have to accept all of the loan offers that you receive.
What can I use a personal loan for?
- Debt consolidation
- Household expenses
- Large purchase
- Student loan
Can a personal loan be transferred to another person?
Personal loans are made based on your personal income and creditworthiness, so they cannot be transferred from one person to another. However, there is a way to shift a loan from one borrower to another. Be sure that you only use this method if you are prepared to take on the debt yourself.
If you want to transfer a loan from another person to yourself, you can do this by applying for your own personal loan. When you receive the funds, you will need to use the money to pay off the loan that you are essentially taking over. Personal loans can be the perfect way for a couple to consolidate their debts into one payment.
Should I get a personal loan or a business loan?
There are benefits and disadvantages to both personal loans and business loans. If you are using your loan to pay for business expenses, business loans may let you borrow more money. Depending on the type of business, your personal credit may not factor into the decision process when you opt for a business loan. Additionally, you do not have to take a business loan out under your own personal name and put your own assets on the line.
However, personal loans offer you more flexibility. You can use some of the proceeds to pay for business expenses, but you will not have to prove that you are putting all of the funds into the business.
What other types of loans are available?
If you are still not sure whether a personal loan is right for you, you may want to consider another type of loan. If you are shopping for a car or trying to pay for college, auto loans and student loans could be the best fit for you. If you need a mortgage, compare mortgage rates at banks and credit unions.
Keep in mind that these types of loans can only be used to pay for specific purchases. If you are looking for a loan that lets you use the funds for anything, a personal loan is still your best bet.
Can a personal loan be used for other purposes?
Are you hoping to go on vacation or buy a new television with your personal loan? There is no need to worry that lenders will not let you use your loan to treat yourself. Personal loans are flexible when it comes to what you can use the money to buy; lenders do not put restrictions on personal loans purchases.
If you want to throw a party or go on a cruise, personal loans get you the money you need without requiring you to use the proceeds to buy a car or pay for college. While you do not have to use the money for specific purposes, you can still use a personal loan to buy a car, pay for college or help with the costs of buying a house.