The Federal Reserve has stated that “Nearly half of Americans don’t have $400 saved for an emergency.” The vast majority of these Americans are employed full-time, but struggling to make ends meeting. And if you don’t have a little cash stowed away for a rainy day, then you could easily get caught off guard by a car repair, medical bill or other unplanned expense. If you haven’t been able to borrow the money from a family member or friend, then a personal loan could be a good way to get you through it.
The top reasons people get personal loans though are for credit card consolidation, debt consolidation, and home renovation. If you are having a hard time getting ahead and making no progress on paying down multiple credit card balances or medical bills, the consolidating all of these into a single payment with a lower rate can help a lot.
You will need to meet a few requirements to be approved for a personal loan though.
Personal Loan Requirements
1. A decent credit score – If your credit score is lower than 700 you may need to get a co-borrower to co-sign on the loan. This is usually a relative or spouse.
2. Income – In order for a lender to loan you money you must have a fairly stable employment history, so that the lender be sure you can pay back the loan.
Beyond the basic requirements, you should ask a potential lender if they offer any discounts. I know what you’re thinking, what kind of discounts could a lender give?
Personal loan discounts –
1. Co-borrower – As stated earlier, if you don’t have the best credit or income, you may include a co-applicant, co-signer, co-borrower, whatever you want to call it, to get the loan. If for no other reason – you may get a much lower rate by adding a co-borrower.
2. Direct Pay Discount – What is a direct pay discount you ask? If you are getting a personal loan to pay off credit cards or other debt, then have the lender pay off those balances directly with the loan will ensure you are not just taking on more debt and going to use it for some other reason. Thus – The lender will give you a discounted rate for doing so.
3. Retirement assets – If you have $30,000 or more in retirement assets you can sometimes get a reduced interest rate as well.
You can also get an ever lower rate by bundling these discounts, so be sure to ask the loan officer your working with about discounts, because they could end up saving you quite a bit.
Regardless of the reason, if you need some money in a fairly limited amount of time, then a personal loan may be what you need. Be sure to do your homework and ask lots of questions.