Why Personal Loans Are Different and Why You Cannot Get One

Have you recently tried to get a personal loan and found your application was not accepted? The reasons are many for your inability to obtain a personal loan but let me start with what a personal loan actually is.

Financial institutions for the convenience of borrowers have created personal loan products that generally have a lower interest rate than that of credit cards and a finite length of time to pay back. They are a better alternative to credit cards for this very reason.

Personal loans can be used for a broad range of purchases and may also be used to consolidate other existing debt and credit cards into one single payment at a lower interest rate.

Unlike other loan types personal loans are unsecured. This means that the lender will look at your credit history prior to considering offering you the finance you require. This can make it tough for some borrowers particularly if you do not have a credit history, that is, you have never borrowed money before or had a credit card or you have defaults or bankruptcies on your credit file.

Lets consider this example. You want to go on a holiday however, to obtain the funds for this holiday you would need to save for 5 years. You go to your chosen lender or advisor to arrange a personal loan so you can have the money now. The lender will consider a number of factors regarding your financial situation including what you are requiring the funds for. They will be tough in their decision making because if for some reason you default on your loan they will have nothing to sell to get the money back.

A common reason why personal loans are often not approved is because the borrower has made too many inquiries/applications recently. Every inquiry/application for funds is marked on your credit file and the more inquiries/applications you make the less chance of obtaining personal finance. The lenders see this as a negative because they will assume that you have not been successful in obtaining funds previously.

Do not confuse personal loans with car loans. They are two different kinds of loans. Car loans are often offered with a lower interest rate as they lender can use the car being purchased as security.

If you are uncertain about how to obtain a personal loan you should use a lending specialist. Lending specialists have personal relationships with lenders to ensure they get the right information from the borrower and can discuss the lending requirements on a personal level to the lender. It provides the best chance of a borrower obtaining funds. In saying this the lending specialist can only assist when the borrower is up front with the information they provide.

Personal loans are perceived as being easy to obtain but don’t be fooled by the marketing hype. With lenders tightening their lending policies they are much more difficult to obtain particularly if you try to do it without the help of a lending specialist.

Personal Loans With Bad Credit Can Turn Financial Fortunes Around

It does sound strange, but a loan can be a key to improving your credit score. It seems illogical that taking on more debt can accomplish this but, in fact, it is a proven method. It explains why people can get personal loans with bad credit hanging over their heads, a loan that has grown in popularity given the tough financial times we live in.

There are several reasons why someone might develop a low credit score, and they are not all to do with irresponsible money management. This realization makes personal loans approved despite bad credit a greater possibility. For one, it can come down to a sudden run of financial misfortune, with a job loss perhaps.

However, even if bad money handling habits are an element of the low score, it is still possible to get personal loans with bad credit, though only if there are sure signs that an effort is being made to put the old habits to bed. In this case, the lender may feel that the future will be a brighter prospect for the candidate, and the risk of default has lessened.

Consolidating Debt

The major issue for everyone with bad credit rating is that debts are hard to pay off. In these difficult financial times, a fall in income or even complete loss of it, means that what was once affordable no longer is and by securing a personal loan with bad credit, extra funds become available to improve matters.

For example, a business owner may see profits take a hit and income fall from $4,000 per month to $3,000. Existing loans and living expenses, however, account for $2,700, which leaves a mere $300 breathing space for unexpected expenses. This is too tight for comfort, so it makes sense to get a personal loan approved despite poor credit.

In fact, if a large enough personal loan with bad credit is secured, then any existing loan debt can be cleared completely. By paying off credit cards, existing personal loans, and some overdue household bills, the monthly costs could be reduced to perhaps $1,500.

The repayments on the new personal loan with poor credit could be around $800, which means that everything is paid up with $700 left to spare. This clearly puts the borrower in a stronger financial position.

Important Application Elements

Of course, such a move needs to pay dividends rather than simply make the borrower feel good. It is never guaranteed to get a personal loan approved despite bad credit. However, so long as the application is convincing, with all of the relevant information included, there is a chance to successfully apply.

The crucial detail, after national identification, proof of age and proof of employment, is that there is a sufficient income being earned. For lenders, there is a percentage of available income required before any approval can be granted. A personal loan with poor credit cannot be so high that there is nothing left over to deal with emergency expenditures.

One of the most important factors when applying for this kind of loan, therefore, is that applicants have done their homework, and know what their repayment limit is. Ensuring that there is money left over shows that the applicant is sensible and more likely not to over-extend themselves. This greatly increases the chances of getting a loan approved despite bad credit.

The fact that a personal loan with bad credit is available at all, shows the willingness lenders have in overlooking mistakes of the past. However, online lenders are probably the most positive minded in this matter, offering the best interest rates and terms available.

The benefits of getting personal loans with poor credit approved, but with debts consolidated and credit ratings improved, the key aims are achieved too.

Used Car Loans – Better Than A Personal Loan?

If you have decided it is time to get a new set of wheels, or perhaps your first ever, you are undoubtedly looking into where to turn to obtain the best kind of loan. Most people begin the process by considering getting either personal loans or used car loans for their upcoming purchase. What is the difference, and how do you know which option is right for you? The answers to these questions will be explored here, giving you the information you need to make the best decision.

Before you even have a specific car selected you can apply for your car loan online. Make sure you know the requirements of your loan before you apply. This means that, if you do go ahead and shop around for cars before applying, you need to make sure it will fit within the parameters laid down by the lender. For instance, some car loan companies may require that the car be new enough or have a limited number of miles. There may be restrictions on what kind of vehicle it can be.

Used car loans can only go toward the purchase of your car. On the other hand, personal loans are much more flexible and can be used toward a number of different purchases. The only reason to take out a personal loan instead of a used car loan is if you have another sizable purchase you want to make at the same time without taking out a separate loan. If your only purpose for taking out the loan is to buy a used car, a loan is what you need. While a loan is a loan no matter where you get it from, there are some differences that you should consider if you are still not convinced that your car purchase is best obtained with a used car loan.

Before you even begin receiving used car loan quotes, you should run a credit check on yourself. If this is your first car, you may not have credit built up yet to be approved for a loan. A cosigner will counteract this problem. Ask a parent or other close family member if they would be willing to sign on a loan with you. Be sure you never sign anything, even in a digital format, you do not fully understand. Contact information should be available on websites, so contact the lender with your questions before you sign up.

The biggest difference between one loan and the next is the interest rate. Obviously, the lower the rate, the faster you can pay it off and the less interest you will pay overall. You often have the choice between variable and fixed rates on used car loans. A variable rate may cost you less money if you want to pay off your loan in the shortest amount of time possible. However, if you know it will take you a little longer to pay off your loan, a fixed rate will keep your payments predictable over the entire term length.

The next big difference is secured versus unsecured loans. When you have collateral, such as the car itself, you are participating in a secured loan. These often come with lower interest rates because there is some security. When you take out a personal loan, most often these are unsecured loans, meaning you are likely to pay a higher interest rate for the convenience of not providing collateral. No matter where you take out your used car loans, watch out for hidden fees to avoid any unpleasant surprises.