6 real ways to get a great personal loan
One thing you need to know about personal loans is that there are good ones and bad ones.
What separates a good loan from a bad one is the interest rate and the difficulty in repaying the loan. Bad credit like payday loans and cash advance loans, while helpful right now, can be financially devastating in the long run. The interest rate for payday loans usually ranges from 200%-500%, an outrageous amount. So, while the interest rate on cash advance loans is 400%, don’t settle for just any loan if you’re short on cash.
Still, the loan that’s right for you may be out of reach, but today we’re going to share with you the 10 best methods to get a great personal loan.
1. Make yourself a desirable borrower
Credit history, credit history, credit history. When it comes to securing a personal loan, an attractive loan is probably the most valuable way to ensure you get the credit you need. So before you look at good or bad credit, make sure your credit history is in order. A FICO score A 579 or lower is usually considered poor credit and most lenders will be cautious about offering you credit. While, according to Experian, an even higher score of 580 to 669 will put you in a difficult position when you get a loan.
However, there are ways to improve your score:
- Pay your bills on time
- Find out about your overdue balances
- Dispute anything that differs from your credit report
- Write in goodwill letter
2. Improve your debt to income ratio
DTI, or Debt-to-Income Ratio, is a percentage that indicates the amount of a prospective borrower’s income that goes toward their debt. Lenders use this percentage to determine your ability to make monthly payments on the money you want to borrow.
You can easily calculate this ratio by adding up your monthly debt. This can include bills such as heating and electricity, and subscription services. Once you’ve calculated your debt, divide it by your gross pay or the amount you earn before taxes. For example, if you pay $900 a month for rent and $200 a month for heating, electricity, and internet, your monthly debt is $1,100. Now divide that by your gross monthly income, $2,500, and your DTI ratio is 44%.
Most qualifying borrowers have DTI ratios lower than 43%hence, it is important to explore different ways to lower your monthly debt such as: B. Reducing unnecessary leisure activities or finding more affordable alternatives to monthly subscription services.
3. Eliminate high-interest credit card debt
Speaking of ways to lower your debt-to-income ratio, eliminating any debt that comes with a 20% interest rate (APR), such as B. High-yield credit cards, your first action should be when you lower your DTI ratio.
The best ways to get rid of this type of debt:
- Transfer your debt to a 0% APR introductory credit card.
- Apply your “fun money” to your balance to lower interest rates.
- Double your payments to pay off your debt faster and save on interest.
4. Increase your income
What many lenders don’t disclose to borrowers is their income requirements. Lenders have these requirements to ensure certain individuals have the funds to pay off their debts. Income requirements vary by credit institution; However, on average, a good income is considered $$15,000 to $20,000 for the lowest loan amount.
If you’re trying to increase your income quickly, you should apply for jobs that offer tips – on average, servers earn $190 in tips per day – and jobs with flexible working hours, so you can easily make time for your two employers.
Once you’ve found another job and made a significant amount of money, gather the necessary documents to prove your income, such as monthly bank statements, tax returns, and payslips.
However, it’s also important to note that unless you’re making at least $15,000 a year, a personal loan can do you more harm than good as you’ll have to pay off the monthly APR balances.
5. Consider providing collateral
Providing your own item for a personal loan is nobody’s first choice, but if you don’t meet the other requirements, pledging valuables can be the best way to get a loan, especially a secured personal loan (loan secured). through collateral). Therefore, if you fail to make payments, your lender can repossess such items as your investment account, collectibles, and other valuables.
6. Consider alternatives
If you find that you cannot get a personal loan through the regular route, you should consider alternative types of personal loans. For one thing, a personal loan isn’t a one-size-fits-all loan, so you’re not going down this path alone. Other types of personal loans to consider are:
peer to peer lending: P2P loans are personal loans; However, this type of loan is backed by individuals rather than lending companies and offers more forbearance compared to these companies.
salary advance: A salary advance is a loan that borrowers receive from their employer. Borrowers of these types of loans are essentially taking funds from their future paychecks without having to apply for funds through traditional lenders.
Financial support from family or friends: When you enjoy your independence, asking others for help can be uncomfortable. But you must remember that your friends and family are there to support you and you will regain your independence.