Last Updated 20.06.2022
When a person faces emergency expenses, extra money is the best solution to overcome such hurdles. Meanwhile, the number of services suggested by lending companies is high enough, and borrowers frequently get lost among the terms, interests, and repayment conditions, having no idea what they need. A personal loan is among the most widespread services in the USA.
While talking about statistics, these loans are just 1% of the overall debt of consumers, but 21.1 million US citizens apply for a personal loan annually; this said, such a service is widespread enough. Furthermore, in 2020 the popularity of this loan type increased by 7.27%. Borrowers need to understand clearly the notion of a loan, possible terms, and conditions to avoid even more severe hurdles.
What Are Personal Loans?
Under this service, a person should understand “the process of borrowing money from a bank institution, credit union, or loan company to pay off some everyday goods and services for himself (herself) or his (her) family. Personal loan rates are usually among the lowest in the industry; this is why the vast majority of people understand this solution as the best way to apply for.
If we compare a personal loan with other services provided for borrowers, the following aspects are the main differences:
- Such a service provides borrowers with low interest; this is why a loan is suitable for a wide range of difficulties to cope with. Interest rates vary from 5-6% to about 20-30% (this offer is much more beneficial than payday loans with APR over 100%).
- No security is required. Unsecured personal loans are available for up to $100 000, and an applicant should correspond to the scope of requirements. Meanwhile, if we compare this service with title loans, there are no risks for a borrower.
- Loan terms are among the most lasting. Applicants may ask for a personal loan for up to 7 or even 10 years; this is why the service matches a lot of expectations.
- The service has a lot of benefits, but negative features are also present – people cannot apply for a personal loan with a low credit score, and that is an essential disadvantage for many borrowers who need to find alternatives.
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Are Personal Loans Legit?
As you know, different US states have their legislature connected with various items, and loans are not the exception. Borrowers should understand the status of a service, depending on a particular state.
Online personal loans are legal throughout the USA; hence, borrowers understand the service as the most suitable solution for any case. Note that in many states, there are maximum interest rates fixed by the local legislature. That means both banks and other companies cannot require higher rates than indicated by the law.
Furthermore, the whole procedure, terms, and conditions are strictly regulated by federal legal acts. Borrowers need to follow their agreements strictly to avoid any problems. In case of force-major difficulties, you need to inform your lending company.
How Does a Personal Loan Work?
What is the mechanism of such a service? This question is among the most widespread ones among people who are going to get extra money. The service consists of the following steps:
- A person faces a situation and understands he (she) hasn’t enough money for repayment, purchase, etc.
- People come up with the decision to get the required amount from a bank or direct lenders.
- Learn thoroughly about the requirements a certain organization demands to provide an applicant with a personal loan.
- Collect the necessary documentation and be sure that you correspond with all the needs.
- Sign an agreement and control the process of your loan – regular repayments are required to pay off the whole amount.
The mechanism of personal loans online is pretty the same as other services have, while the key differences include interest rates, terms, and the overall amount of obtained money.
What Are Personal Loans Used For?
The vast majority of people have ever faced the situation of lack of money. What are the most widespread reasons for online personal loans?
- Debt consolidation. According to statistics, more than 12 million US citizens have debts of different types. The service helps borrowers avoid penalties and additional expenses.
- Home renovation. Such a reason may serve as both well-planned or emergency, while personal loans help homeowners make this process appropriately, working out a project and using qualitative materials.
- Emergencies. They say payday loans are the best for emergencies; meanwhile, a personal loan online is a better choice in case of a high credit score. Get more money for a long-term period.
- Equipment or applicant purchase. Imagine that you need to get some professional equipment or kitchen appliance urgently, but there is no enough money to fulfill your plans. This service grants borrowers with necessary costs, offering convenient repayment conditions; this is why the popularity of such loans is constantly on the rise.
- Vehicle repair. Vehicles are integral parts of our everyday lie, but they are perfect until the repair time. When a person faces the necessity of a car emergency repair, online personal loans are excellent choices.
- Wedding/other special events. When you are going to celebrate your wedding, everything should be perfect, and a loan service helps a future couple to forget about the lack of money for a while.
The complete list of reasons to apply for a loan is much broader; this is why the number of Americans applying for credit unions and online loan companies steadily grows.
How Much Is the Interest Rate on a Personal Loan?
No companies answer the question of what the rates are for such a service, as the APR depends on different factors. Let’s dive into the most important to understand possible rates:
- The required money amount. Personal loan lenders offer from $2000 to $100 000, and applicants may cover diverse needs with the help of that money. Meanwhile, the more you receive from a company, the higher interests are implied. People may get a loan of $2000-5000 with the lowest rates.
- Terms of a loan. Depending on the company, the service is available from 6 months to 7-10 years; this is why borrowers are free to understand the preferred way on their own. The paradox is that longer terms imply lower interests.
- Company. Rates directly depend on where you are going to get a personal loan. Some companies include hidden fees to increase the overall repayment amount. For instance, FasterLoans offers clients the most beneficial and transparent conditions.
How Much Can I Borrow for a Personal Loan?
The service empowers borrowers to get from $2000 up to $100 000, and this amount is enough to cover all your problems. Meanwhile, some pitfalls still exist.
Foremost, the possible amount of money to borrow directly depends on your credit score. Note that personal loans for bad credit scores are possible in online lending companies, but there appear to be a bunch of additional conditions and requirements. According to agencies that collect borrowers’ credit score, this index is categorized into the following groups:
- Bad credit score (under 640);
- Fair score (640 – 699);
- Good score (700 – 749);
- Excellent score (over 750).
A credit score may influence your loan rates as well. A fair credit score is enough to receive a loan, but a company understands that repayment problems are possible. Such a score guarantees borrowers access to minimum amounts (up to $10-15 000). While talking about the excellent credit score, applicants may get the maximum amount of money suggested by a particular company.
Income verification is among the key stages to obtain personal loans online, and such a factor influences the maximum amount as well. The more money you earn annually, the higher sum is available as a loan.
How Long Does It Take to Get a Personal Loan?
The procedure of getting such a loan is stricter than other services. When people need money urgently, they frequently select fast cash loans that imply the possibility of same-day approval. If to analyze the procedure of online personal loans, the following stages take your time:
- Fill in the application. The first stage may take from 15 minutes to 1 hour, depending on a lender. Banks usually require more information from an applicant. Online lenders are interested in making the process quick and convenient.
- Wait for the approval. While talking about online companies, this procedure usually takes from 3 to 7 business days, while the same day approval is impossible. Banks consider applications from 1 to 7 business days as well.
- Funding stage. When a person gets approval for personal loans, he (she) receives money on a credit card or bank account within seven business days.
This said, the minimum terms to get a loan are two business days, while the maximum terms for the whole process are more than ten days. When you need money instantly, choose alternatives.
How to Qualify for a Personal Loan?
When you need to get your application approved, correspond to some basic requirements:
- Online personal loans are available for US citizens only. Foreigners need to ask for special conditions while applying to lending companies, but the percentage of rejections is extremely high.
- The service is available for applicants over 18 years, no matter which US state you select.
- People who need a loan have to verify their incomes. Low income is possible as well (disability or unemployment pension, for instance). While having no income, borrowers may apply for secured personal loans.
What about the documentation required for receiving a loan? Applicants need to have the following documents:
- ID, driving license, or other identity verification documents;
- Income verification (prove your income for the last three months).
- Bank statement of the previous three months.
- Proof of address correctness.
- Active phone number of email.
This is the list of basic documents for a loan application. Meanwhile, certain companies and banks demand more documentation to approve your application.
How to Apply for Personal Loans Online?
According to the mentioned stats, more than 20 million US people apply for such loans every year; meanwhile, a person should keep in mind a “ready-made guide” on which steps are required to get a loan. Follow the next stages:
- Understand the required amount of money. Don’t get a personal loan for more amount than you need.
- Choose a company to apply for a service. Fill in the application form and wait for online approval.
- Sign an agreement and get your money from a company.
The whole procedure is straightforward enough. When you need to obtain special conditions, specify them in advance. For instance, some applicants require no credit check personal loans. Such cases are discussed individually.
Where Can You Get a Personal Loan?
The service is provided by banks, credit unions, and online loan companies. Each solution has both pros and cons. Learn about the key ones:
- Banks. Such institutions are more beneficial from the viewpoint of interests and general conditions; meanwhile, the approval procedure is much stricter.
- Credit unions. Suggest moderate interest rates and simple conditions for applicants. The approval time is usually lower.
- Loan companies. Borrowers understand them as the golden middle, as such companies have straightforward requirements and a set of alternatives (for instance, bad credit loans).
Take into account all pros and cons of every solution, learn more about conditions, analyze reviews, and come up with the final decision.
Can You Refinance Personal Loans?
While getting a loan, borrowers sign an agreement where all repayment conditions are clearly stated. Meanwhile, there are many situations when a person cannot fulfill the agreement and needs to refinance a loan. Personal loan lenders suggest the following steps:
- Apply for a loan refinancing to get new conditions (longer terms, smaller repayments, etc.).
- Consider the new rates and the overall money amount you need to pay off according to new conditions. Compare these conditions with your previous ones.
- Sign a new agreement with a company and continue repaying your loan.
There is another way of refinancing. Get a loan for debt consolidation in another lending company. Pay off your previous loan and start repaying a new one with better conditions.
What Is the Benefit of Obtaining a Personal Loan from FasterLoans?
The number of companies offering such a service is constantly on the rise; meanwhile, applicants still have a question about what is the best place to get a personal loan. Our company has a perfect answer. What are the key reasons to apply for a loan here?
- The company includes a vast network of lenders all over the US territory; this is why borrowers may find the most suitable conditions and location.
- Personal loans are suggested with transparent conditions and no hidden fees. Use the inbuilt calculator to see the overall repayment sum.
- The application approval takes minimum time.
This said, get the best conditions and don’t wait for “tomorrow” to make your dreams come true!