Life is unpredictable and sometimes you need help. Maybe you need to consolidate your debts or you want to fund a vacation. No matter why you need money, you can get cash fast by applying for a personal loan. You don’t need to have perfect credit or to go through a big banking institution. It’s a borrower’s paradise with how many lenders are providing personal loans online, but you need to learn the ins and outs to make sure you get a loan from a reputable lender.
What are personal loans?
Personal loans, also known as signature or installment loans, are typically small, short term loans provided by a bank, credit union, or online money lender that is paid back in equal payments. While there are two types of personal loans, which we’ll touch on in a moment, they usually have less stringent approval criteria than credit cards and other types of loans which makes it easier for borrowers to qualify. This lowered barrier to entry has made personal loans one of the most popular types of loans available since people can get they money they need when they need it.
Types of personal loans
There are two main types of personal loans.
- Unsecured: An unsecured personal loan is one that does not require any assets (car title, house deed, etc.) to be put up as collateral in order for you to qualify. This puts the lion’s share of risk on the lender which is (normally) balanced out by higher interest rates and lower allowing them to offer lower interest rates.
- Secured: A secured personal loan is one that does require collateral. This should balance out any potential risk for the lender allowing them to offer lower interest rates.
Most personal loans you’ll apply for are unsecured so you shouldn’t have to worry about needing collateral. While interest rates and requirements may vary from lender to lender, this is generally what you can expect from secured and unsecured personal loans. However, be sure to compare lenders and loan types before choosing. You want to make sure you get the best deal possible.
How do I qualify for a personal loan?
All you need is a signature. Like we mentioned before, most personal loans are unsecured so collateral isn’t necessary and lenders don’t perform traditional credit checks so your credit score and history isn’t weighed as heavily. This lets you qualify for a personal loan even if you have bad credit!
General Personal Loan Requirements
While requirements vary based on the lender, we’ve found that no matter where you apply, you’ll need the information below. Be sure to have these documents ready to go before filling out your personal loan application to make the process go by as quickly as possible. The more info you provide, the faster you can be approved.
- Government issued ID
- Social Security Card
- Proof of income
- Proof of residence
- Active checking account
Why should you get a personal loan?
There are many reasons why getting a personal loan is a great decision. The best part is that you can use the loan for anything. It’s quite literally your money and you can use it to pay off other debts, go on vacation, or whatever you want. No collateral is required either so you don’t have to get your car, home, or other asset appraised and you don’t have to worry about forfeiting said asset if you happen to get behind on payments. They’re also a great alternative to credit cards since the APR and your payments are fixed. Your payment is your payment until the personal loan is paid off.
Personal loans can also be used to build up your credit rating if you have bad credit. They’re easy to qualify for with their reduced approval criteria so borrowers with low credit benefit the most from getting (and paying off) a personal loan). You can also use a personal loan as a debt consolidation loan by rolling up multiple smaller debts into a single payment. And because interest rates are usually lower on personal loans, they can actually end up saving you money!
Where can I get a personal loan?
We regularly review lenders and you can find them on our personal loan providers page.