Sometimes you need a small amount of money to cover an unexpected expense or to take advantage of a good deal. If you don’t have the money, a small personal loan – ranging from a few hundred dollars to thousands of dollars – could complete the deal.
Personal loans can be more affordable than other forms of financing, such as a high interest credit card, payday or title loan. And if you have good credit, you could benefit from an attractive rate and a low payment. Find out what kind of rates you qualify for today through Credible.
To determine if a small loan is right for you, you need to understand how they work and how to apply for them. Here’s everything you need to know, starting with the different types available.
7 types of small personal loans to consider
While personal loans can be available up to $ 100,000, a small personal loan is generally between $ 600 and $ 3,000. This type of loan is money you borrow from a financial institution, such as a bank, credit union, or online lender. Once approved, you pay off the debt by making monthly payments. The terms and interest rates are based on your credit history and your score.
There are at least seven types of personal loans you should know about:
- Unsecured personal loans
- Guaranteed personal loans
- Debt Consolidation Loans
- A personal line of credit
- Pawn shop
- Title loan
- Payday loan
1. Unsecured personal loans
These installment loans do not require collateral and generally require borrowers to have good credit. Without collateral, it is important that you have a stable income and a good credit rating in order to benefit from lower rates and be approved by a private lender.
If you know you have a good credit score, you can start your research now. Use Credible’s free rate table to view multiple lenders and offers at once. Simply enter your desired loan amount and your estimated credit score to view loans from $ 1,000 to $ 100,000.
HOW TO OBTAIN A PERSONAL LOAN OF $ 100,000
2. Secured personal loans
This type of installment loan is backed by collateral, such as a car or savings account, and is typically offered to borrowers with fair credit.
3. Debt Consolidation Loans
A debt consolidation loan is taken out to consolidate the monthly payments on other debts.
Check out Credible Debt Consolidation Loans. Their 3-step process is quick and painless. All you have to do is check the rates of several personal lenders both to determine the best company and the best loan for you based on your desired loan amount, submit an application and close the loan. Don’t wait for rates to go up – get started today.
DO I HAVE TO USE A PERSONAL LOAN TO CONSOLIDATE DEBT?
4. Personal line of credit
This type of personal loan is similar to a credit card, with a revolving amount that becomes available again to borrow when paid off.
A pawnshop offers borrowers a small loan, using a valuable item, such as jewelry, to secure the loan. If the borrower does not repay the loan within a specified time, the pawnshop keeps and sells the collateral item.
6. Title loan
This type of loan uses your car’s ownership papers as collateral. If you don’t pay back the loan, you are putting your car at risk.
7. Payday loan
This type of loan provides funds which are borrowed against your future salary.
The interest charged on these types of loans can vary widely. Pawn shops, securities and payday loans often have the highest interest rates. Visit an online marketplace like Credible to explore personal loan options and find the best rates for your situation.
HOW TO GET A PERSONAL LOAN IN 7 EASY STEPS
Why should I get one?
Personal loans can be used for just about anything, such as:
- An emergency expense, such as a medical bill or car repair
- To provide extra money during a personal crisis
- To consolidate other debts that have higher interest rates
- To buy a used car
Before taking on additional debt, think about all of your options and be sure to consider the rates and terms. You want to choose a loan with a payment that you can afford. Visit Credible to use their personal loan calculator to determine the impact of the payment on your monthly budget.
DOCUMENTS REQUIRED TO APPLY FOR A PERSONAL LOAN
A small personal loan can save your life in a variety of situations, but only if you understand how to use it. When you take the time to make the best choices, you help improve your financial situation in the long run.
How can I apply?
Each lender has their own application process and their own qualification requirements for personal loan borrowers. Lenders generally look for a stable income, a low debt-to-income ratio, and a good credit history. If you want to find the best interest rates, it pays to shop around.
If you need money for an emergency, look for a loan that can be approved and funded quickly. And make sure the loan has clear terms, no hidden fees, and a fixed payment schedule.
Since lenders have different requirements, a good start would be to visit a site like Credible, where you can explore your personal loan options and compare rates and qualifications.
Most banks, credit unions, and online lenders have an online form to start the application process, which means you can apply at any time.