How to Get a Fast Personal Loan

How do fast personal loans work? Basically, the borrower either goes in person to a payday loan shop or locates a reputable company online. The next step is to fill out an application and provide basic proof of your ability to pay back the debt.

Most lenders will require that you are at least 18 years old, an active resident of the United States, and otherwise “payday loan free.” You might also have to demonstrate proof that you have a working checking account and that you make a certain amount of money per month vis-à-vis a steady income stream.

Personal Loans for People with Bad Credit

Lenders of fast personal loans will generally not ask you to show proof of credit or require collateral. No one will check your credit report, so you can achieve a financial shot in the arm even if your credit rating is bellow 400. To qualify for fast personal loans, however, you will often have to provide a personal check remitting the amount plus a hefty interest fee. For instance, on a $200 loan, you might be charged a processing fee of $30 or $40.

Terms associated with fast personal loans are typically very brief. You may have 14 days, for instance, to remit the balance. After this time, you may authorize your lender to cash the check you used to take out the loan or ask the lender to rollover the balance to a subsequent pay period. The danger here is that, with each rollover, your interest rate charges tack on more to your total balance. Thus, a small loan of $200 can quickly become an extravagant expense and pave the way to financial insolvency.

Loan terms associated with fast personal loans may be negotiable. Although you generally can't secure loans with collateral, you may be able to pay off the balance with a credit card or otherwise funnel money from your next paycheck to resolve your debt without resorting to claims of bankruptcy or other extreme measures.

Under the right circumstances, fast personal loans can prove immeasurably helpful for dealing with life's unfortunate accidents. However, to guard against using these instruments frequently, build up an emergency fund, and lower your interest rates on your debts.

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Homeowner Personal Loans

Owning a home opens up more borrowing avenues than just your mortgage. When you need funds, whether the need relates to your home or not, you can save money when you take advantage of available homeowner personal loans. These loans may not always be your best option, but knowing how each works can help you narrow your loan search.

Home Equity Loan

A popular option among homeowner personal loans is the home equity loan. This secured loan uses your home as collateral like a mortgage, but your lender files it as a second lien on the property. This means your equity lender gets behind the first mortgage for payment when it comes to a foreclosure.

To protect their investment, equity lenders use a formula to determine how much they can safely lend you. For instance, they may decide that the total of your loans cannot exceed 80 percent of the home’s value. If your home is worth $200,000, they cap your borrowing power at $160,000. When you owe $120,000 to your first mortgage lender, you have $40,000 in available equity to borrow. Sometimes, state law dictates the maximum loan to value, even though financial institutions may set their maximum well below the state’s limit to mitigate their risks.

Home Equity Line of Credit

A home equity line of credit is a more flexible version of the home equity loan. Homeowner personal loans in this form use the same calculations to determine available equity, but you do not receive a lump sum check after closing your loan. Instead, your available equity becomes your credit limit on a revolving credit account. You’re free to borrow from it and repay it as you see fit until loan maturity.

Equity credit lines typically allow you to draw from the line for a period of 10 years. At that time, your lender converts what you still owe into a fixed rate home equity loan, giving you 20 years to repay the full balance. In some cases, your lender will allow you to reapply for a new line of credit with a new maturity date.

The selection of personal homeowner loans available to you can vary based on the state you reside in and your credit history. Although these loans have potential to save you money at tax time, always check with a tax professional before writing off the interest. You should also consider the prevailing interest rates for unsecured loans. If your home equity loan rate is not below what you can get for unsecured credit, it may be time to try a different lender.

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High Risk Personal Loans

The most sought after loans are those with low interest rates and favorable terms, but only individuals with exceptional credit scores can get these loans. On the other side of the lending spectrum are high risk personal loans. Everyone knows these loan options exist for individuals with a poor credit rating, but few people know exactly why lenders consider them high risk.

Risk Factors for Lenders

Whether your lender grants you a $3,000 unsecured loan, a $25,000 auto loan or a $250,000 mortgage, they take a risk you will not repay your debt to them. You may think that there is less risk involved with the auto loan or mortgage because of the collateral, but this isn’t always the case. Sometimes, lenders wind up with vehicles or homes they are unable to sell for enough to recover the cost of the loan. Depending on the model of car or your housing market, lenders can take substantial losses after repossession or foreclosure.

In general, your credit history is the primary tool your lender uses to determine your default risk. Do you have collections and charge-offs? Do multiple creditors report slow pays? Although this alone does not prove a lack of trustworthiness on your part, it does give your lender reason for pause. If there were extenuating circumstances to cause your credit blemishes, you may not fall into the category of high risk personal loans.

Your income source is another area of concern for some lenders. Self-employed individuals in seasonal professions are riskier to loan money to than salaried employees at established companies. This is also true of commission-only workers. It isn’t that any one line of work is better than the next; it’s that fluctuating incomes are unstable. Any uncertainty about your ability to repay your loan during your lean times of year can classify you as a high risk borrower.

Taking High Risk Loans

Receiving high risk personal loans is not the financial kiss of death, just higher interest rates and fees. In fact, taking a high risk loan can be the first step to returning to favorable credit status. As long as you make your payments on time and work to correct any existing credit issues you can fix, you can restore your good credit rating and potentially refinance your high risk loan in the future.

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Getting Out of Payday Loans

When you need a small amount of money for a short period, payday loans can be valid options. The problem borrowers run into is that short terms and high fees make these loans difficult to repay, forcing them to take out new loans each payday to cover the original amount. If you’re in this situation, it can feel like you’ll pay this loan’s high fees for the rest of your life, but there are simple steps you can take break the cycle for good.

Consult your budget

At this point, it doesn’t matter if you started using payday loans because of an expensive emergency or you weren’t managing your money in a responsible manner. Getting out of the payday loan cycle is your focus. Before you can do this, you must revisit your current spending habits.

Review your household budget and your bank statements to uncover areas of overspending. Even if you can only cut out $100 in expenses each month, that’s enough to make a dent in most payday loans and begin slashing the amount of fees you’ll pay from each paycheck. Maybe reviewing your spending means you’ll forgo eating out, cable or trips to the movies until you repay your payday loan debt, but the result is well worth the sacrifice.

Compare your loans

Depending on the expenses that led you to use payday loans, you might have multiple loans with various lenders if you were unable to get enough money from one. Fees for so many different high interest loans make it even more difficult to get out of debt, but it’s not impossible. Read all your contracts and find out which loan charges the highest fee per $100 borrowed. Make it your goal to repay that one first to save the most money.

Cut back on your borrowing

Just because your first payday loan was $500 with fees totaling $50 doesn’t mean you must borrow the full $500 each payday. In fact, some lenders will let you borrow money in $25 increments. Borrow as little money as you can afford at each check. For example, borrowing $400 instead $500 will cut your fees by $10, giving you $110 you don’t need to repay from your next check. Be diligent with your spending habits and chip away at your payday loans with every payment until your balance is gone.

No matter how you entered the cycle of payday loans, never forget that you can get out of this debt. As long as you make it a priority, you will succeed.

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Getting Low Interest Loans

No one begins the search for loans with the intention of obtaining the highest rate possible. While getting the amount of money you need is of primary concern, finding low interest loans is a close second on the priority list. To ensure you get the best possible deal, there are steps you can follow to make this desire a possibility.

Know credit management guidelines

Although no one can give you the exact model of building and maintaining a perfect credit score because the major credit bureaus hold that secret close to the vest, you can follow a set of credit management guidelines that will help you get low interest loans when you need them. The basics include:

• Make your payments on time, every time
• Use no more than half of your total available credit
• Maintain a good mix of credit products, including mortgage, auto and credit cards
• Keep your credit accounts open when you pay off the balance to help your debt utilization ratio
• Focus on credit longevity by using the same credit card for a number of years
• Never apply for credit and store charge cards when you already have enough to meet your needs

Understand credit scoring

Credit bureaus use the FICO score, named for the Fair Isaac Corporation that developed the scoring model. FICO scores run from 300 to 850, with 850 being the best possible score. While the goal is to reach the illustrious perfect score, excellent credit is generally in the mid- to high-700s. Anything below 600 constitutes a poor credit score.

Understand your credit file

The information contained within the file is just as important as the score when qualifying for low interest loans. High and perfect credit rarely features blemishes of concern, but average credit does. Your lender will take interest in:

• The amount and age of repossessions or foreclosures
• Whether you consistently pay bills late
• Collection activity
• If the amount of available credit is proportionate with your income
• Defaulted student loans
• Number of recent credit inquiries

Keep in mind that even individuals with stellar credit scores can make mistakes when applying for low interest loans that hurt approval chances. If a lender sees a dozen recent inquiries, but cannot determine if you’re shopping rates or obtaining accounts, they may offer a higher rate on the assumption you’re going on a spending spree you might not be able to repay.

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Getting Instant Loans at Tax Time

In the fast food society that wants everything yesterday, there’s a mystical appeal to products that give consumers something right then and there. The instant loans offered during tax season are no exception. Although these instant refund anticipation loans provide fast cash, they may not be the best alternative in your situation, regardless of the sales pitch.

Facts About Instant Loans

If you listen to the radio or watch television around the income tax filing deadline, you’ve heard the promise of walking into a tax preparer’s office and walking out with a check in hand. While instant loans might appear too good to be true, they’re 100 percent legitimate. They also carry a hefty fee for the convenience.

Without going into detailed specifics that vary by company, the gist is you’re borrowing against your own money. When the company prepares your income tax return and determines you have a refund coming, you get this instant cash option. Rather than waiting for the government to send you your full refund amount, the company offers you an amount less than your refund. In exchange for walking away with your money, you agree to let the government send the company your full refund, thus repaying your loan in full, including the fees. That’s why this instant loan is called a refund anticipation loan.

Alternatives to Instant Loans

If the idea of paying an effective interest rate in excess of 200 percent for the privilege of using your own money doesn’t appeal to you, there are alternatives to instant loans. Keep in mind that while you will not receive immediate benefit of the funds, you will enjoy the full amount due to you. In this case, patience is not just a virtue; it’s a money saver as well.

Take advantage of timesaving options available during tax season. You may be the kind of person who enjoys putting pen to paper when figuring your taxes, but mailing your return to the IRS takes extra time. Tax preparation software programs often come with a free eFile option. If using forms from the IRS website, you can often eFile without fee through the same site.

Use the direct deposit option. Again, waiting for a check to arrive in the mail is time-consuming. The IRS deposits refunds into accounts on Friday of each week after processing. As long as you beat the rush and file early, you can have your full refund within as little as two weeks. When it comes to the IRS, two weeks may as well be instant.

When you find yourself in a financial bind, instant loans from the tax preparer may be a better option than waiting the two weeks. Carefully weigh the advantages against the disadvantages to determine what’s right for you.

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Getting a Business Loan Using Personal Credit

Starting a business is a noble endeavor pursued by countless Americans each year. Unfortunately, it’s an expensive undertaking that causes most to seek a business loan to cover the unexpected expenses. For fledgling businesses, securing financing is not easy, but there are options available.

Business Loans

You can walk into any financial institution and find a department to handle the processing of your business loan. You’ll also find that business lenders require proof you’ve been in business and generating cash flows for a specified period. Once your business is up and running, securing a business loan or line of credit for operating and expansion expenses is a good option. In the beginning, however, it’s not an option at all.

Small Business Administration (SBA) Loans

The Small Business Administration is a government organization that funds businesses in the early stages of development. To qualify for an SBA business loan, you must prove you’ve done your research on the industry and found a viable customer base for your product or service. You’ll need a marketing plan, business plan and projection of income for the next seven years. If you plan to start a business in the same industry you’ve worked in for the last 20 years, you have a better shot at approval than a long time stockbroker looking to open a bakery.

Personal Loans

The most common method of funding your business is to obtain a personal loan for your business expenses. Some people try to use their personal credit cards for business expenses, while others take equity from their home to cover costs. You can outright get a personal loan for your business, but you must be careful in the way you do it.

For example, it’s inadvisable to walk into your bank and say you want to apply for a personal loan to start a business. For some financial institutions, it’s an automatic decline because you’re really applying for a business loan, not a personal loan. Other companies may view your request as high risk because there’s no guarantee you’ll make enough at the new business to repay the loan, especially if you quit your existing job.

By no means should you lie to your bank about the purpose of your loan when asked, but consider your words and the nuances of what you say. While you may be starting a business, are you really leaving your current job to work at it full-time? Or are you investing in a business opportunity in addition to your current employment. The difference is slight, but there is a difference. If you have a good relationship with your lender, talk openly about your plans and find out what lending options the bank has available for your situation.

Whichever route you go for your business loan, the point is to not get so bogged down in the details that you forget to start the business. The more you work at your business venture, the more options will become available to you.

When you need a business loan to pay for new business expenses, it’s difficult to get what you need. Rather than focusing on a specific kind of business loan, explore your options and use whatever’s available to you.

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Getting a Bank Loan

With its mahogany desks and polished marble floors, some borrowers find banks intimidating. Even if you have an excellent relationship with your banker, getting a bank loan is not always the easiest endeavor. Bankers must follow strict requirements set by the institution. Knowing what to expect when you apply and following three strategies is the best way to expedite your loan process.

Credit Requirements for a Bank Loan

In most cases, you need good credit to get a bank loan. Although most financial institutions have ties to finance companies specializing in bad credit loan options, your banker needs to see a credit score of at least 650 on the scale of 300 to 850. You may even need a score as high as 720 to qualify for favorable rates and less paperwork.

To have a more positive lending experience with your bank, pull a copy of your credit report on a regular basis. If it shows incorrect information, fix it. When you know you have blemishes on your credit, prepare a document explaining any extenuating circumstances. For example, a low credit score due to unpaid medical bills isn’t always viewed the same as a low credit score for poor money management. Providing this information upfront saves time because the underwriter won’t have to ask for clarification about the situation.

Collateral Requirements for a Bank Loan

Banks have some of the strictest guidelines to follow concerning collateral. Just because a used car qualifies for financing at the dealership doesn’t mean your bank can refinance the loan for you. Bank loans require vehicles to be no older than a certain age, usually five years, and have sufficient value to cover the loan plus their administrative costs. This means that a loan of $8,000 can require a vehicle value of $10,000 to allow the lender breathing room.

Before you visit your bank for a secured loan, investigate the value of your collateral. Remember to use the wholesale value rather than retail cost because banks sell cars and homes at auction in the event of repossession or foreclosure. If you feel your collateral justifies a higher loan amount than the wholesale value indicates, prepare to back up your claims with upgrade details or market comparisons.

Paperwork Requirements for a Bank Loan

Paperwork and documentation requirements are frustrating aspects of any bank loan. While you can understand the lender’s need to verify your income, the amount of documentation may feel excessive. As a rule of thumb, take two years of tax returns and your most recent paystub for loans exceeding $25,000. Your banker may not need it, but having everything ready at the time of applications saves you from digging through your files and faxing lengthy returns the following week.

It may never be easier to get a bank loan than it is a direct mail credit card offer, but following these few tips can help you enjoy as smooth a lending process as possible.

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Finding the Best Personal Loans

Finding the best personal loans out there means you must research not only your loan options, but also your lenders. Every lender has one area in which they specialize. Knowing what that area is will help you narrow your focus, which allows more time to shop rates and terms between your lenders.

Payday Advance Loans

A payday advance loan is a short-term option that helps float you between paydays when you can’t make ends meet. A payday loan company is an obvious choice, but your bank may have another cash advance option to meet your needs. Direct deposit advance, available at some financial institutions, allows you to advance funds from your paycheck as long as you have an established history of direct deposits into your bank account. Both direct deposit advance and payday cash advances carry high rates of interest and are not the best personal loans out there unless you are in an emergency.

Auto Loans

An auto loan is a personal loan secured by the purchased vehicle. Although you can obtain financing at most auto dealerships, they are often not your lender. Instead, dealerships partner with auto finance companies that offer rates and terms to their customers, typically within an hour. You can also find auto loans at your bank or credit union that may have more favorable rates.

Unsecured Loans

An unsecured loan doesn’t require collateral and is among the best personal loans when you need a smaller dollar amount. Because the lender has only your guarantee to repay the loan in lieu of tangible collateral, your interest rate is higher than the rate of secured loans. Financial institutions are your primary source of unsecured loans, but you will also find finance companies in your town and online ready to meet your needs.

Home Equity Loans

A home equity loan is a special breed of personal loan because it uses your home’s equity as collateral, placing a lien on the property until you fully repay the loan balance. Depending on your state’s equity lending guidelines, you may only be able to obtain an equity loan through a bank or mortgage company. Keep in mind that equity options take longer to close than a standard personal loan.

Locating the best personal loans in your area is a matter of knowing what type of loan you need and finding a lender who offers the product.

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Finding Small Personal Loans

Obtaining small personal loans can be more difficult than finding a lender for a large loan or mortgage. Lenders make their money from the interest you pay for the loan and even high interest rates on small balances do not add up to much. With that in mind, you do have several options for getting a small dollar loan, but remember the interest rate will be higher than it is for larger dollar amounts.

Banks and Credit Unions

Your bank is among the best source of small personal loans in the industry, especially if you have a long-standing relationship with them. Leveraging your total financial relationship with the institution can help keep your rate affordable. This is also a convenient option because many banks allow you transfer money online from your checking account with them to the loan account.

The primary disadvantage of getting a small loan from your bank is they usually have minimum loan amounts. If you only require $250 and they require you to borrow $1,000, your payments will be much higher than you want, even if you do immediately repay the unwanted $750 difference.

Payday Loan Companies

Payday loans are another source of small personal loans. You take them your paystub and often walk out with your money within minutes. When you’re in dire need of funds between paydays, this may well be your best option.

Before you head to the payday loan company near you, keep in mind that these loans have the highest annual interest rates in the lending industry. Because the term is often only a few weeks, these companies will not report your payment history to the credit bureaus unless they send you to collections. If you’re looking for small loans to help build up your credit score, this isn’t the right loan option for you.

Credit Card Cash Advances

If you have a credit card for any length of time, you lender will start sending cash advance or convenience checks to you with your statement. These checks allow you to take out small personal loans without using your card, limited only by your credit limit. When you need money to pay another credit account, you can use these checks.

Even when the convenience check offers a lower interest rate than you pay for your credit card charges, they typically charge a cash advance fee for the privilege of using the check. Depending on the advance amount, this can be a substantial charge added to your loan balance. Do the math on any planned advance before you use the checks to ensure the lower interest rate offered is as good a deal as it looks.

Even though small personal loans charge higher interest rates, you can still find the exact loan you need if you can be flexible in your approach.

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Finding Bad Credit Loans

When a less than stellar credit history stops you from getting the loan you want, you have two options on how to proceed. You can give up and put your plans on hold, or you can look for bad credit loans to meet your needs. Loans for shaky credit scores may not be as desirable or plentiful as they are for the A-credit borrowers, but you do have options.

Starting your search

Even in times of economic downturn, you can still find loans available for virtually every credit score. Rather than applying for the first loan you find that caters to bad credit, be willing to put a little more effort into your search. Loan options with attractive terms may not be the first ones to pop out at you.

Before you approach any lender, know your credit score. Although no lender can guarantee approval based on score alone, bad credit loans typically tie interest rates and terms to the score. Giving your lender an estimate of your score allows him to talk about your options with his company. Avoid submitting applications with multiple lenders because this lowers your already perilous credit score. If the lender can tell you that they only approve loans for certain credit requirements you don’t meet, apply elsewhere.

Finding a lender

Hundreds of online companies compete for your business, but you may find local lenders also willing to make bad credit loans. Talk to your banker about your situation and find out what options your financial institution has for you. Depending on the size and nature of the bank, she may have latitude in making loans to longstanding customers. This is especially true of smaller, locally owned bank branches.

Nationally associated financial institutions have other benefits during your loan search. While you may not meet strict underwriting guidelines, financial services companies often have sister companies that handle those loans they cannot. Let your banker refer you to the finance company they use to see if loan approval is possible. Just remember that finance company rates for bad credit loans will be substantially higher than the rate your bank offers, sometimes by several percentage points.

If you’re unable to find bad credit loans available close to home, your search isn’t over. Online lenders and payday loan companies are still available to help you out, so long as you understand they charge interest and fees well above the standard bank loan.

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Find an Unsecured Consolidation Loan

After you determine debt consolidation is your best option for managing your debt, you may find the process of looking for help a bit discouraging. Lending companies are more than willing to provide loans using your home as collateral, but locating an unsecured consolidation loan may lead you to businesses of questionable ethics. You do have legitimate lending options available as long as you’re willing to devote a little extra time to the process.

Think like the lender

It’s natural to think you deserve an unsecured consolidation loan because you make your current payments. Once you eliminate those, it reasons that you can afford a lower total payment. When you look at it from a lender’s perspective, it isn’t always so black and white.

Consider the fact that your current debt is spread between a number of lenders, effectively limiting each company’s risk in the event you default on your loans. With a consolidation loan, one lender takes on the risk of all the creditors. When you get an unsecured loan, you offer no tangible guarantee that the lender will ever see that money again.

Evaluate yourself as a borrower

Your credit score and income are two important factors in your ability to find an unsecured consolidation loan. Learn what your credit score says about you. A low rating coupled with a history of late payments and collection activity indicates high risk to the lender. A high debt to income ratio can say you live beyond your means, whether or not you consolidate your debt.

Look at your options

Sometimes, the amount you wish to borrow is impossible to receive in the form of an unsecured consolidation loan based on your credit and income. When this happens, know that your bank is not the only company able to assist you. Consider a credit counseling agency.

Not every credit counselor offers debt consolidation loans to clients, but they will provide you help making your budget and analyzing your spending, making it possible to break your bad financial habits. You may also receive a debt management plan offer from them. Instead of refinancing all your existing debt into one account, your credit counselor acts as your liaison with your creditors. They accept one monthly payment from you and use the majority of the funds to pay each loan. After you’ve been in the debt management plan for a set period, they may offer the unsecured consolidation loan you originally wanted.
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