In 2018 Personal Loans become more and more popular as they offer up to $35,000 instant cash to borrowers with both good and bad credit. Statistics show that the number of customers doubled since 2015. One of the main reasons is Unsecured Personal Loans suit any needs and are easily taken out and repaid. Read further to find out if Personal Loans fit your requirements and compare the best offers from direct lenders, or apply online.

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How much would you like to borrow?

Contents:

The loan business becomes personal.

What exactly is a personal loan?

How the industry was born.

How much money can you borrow?

Why are personal loans so popular?

When is it advisable to use a personal loan?

When will getting a personal loan be a bad step?

What impact does a personal loan have on your credit rating?

Sum up. Should you get a personal loan?

The loan business becomes personal. 

We are talking about personal loans and their scheme is standard. You borrow money from a lending institution and then pay it back.

But what is the plus of personal loans? You don't need collateral to get a personal loan. This is the main difference between personal loans from mortgages or car loans.

Many consumers must like that because personal loan business is booming. But is it suitable for you?

  • Yes!
  • No!

It all depends on your financial situation in which you are now. However, personal loans are a great way to get out of the financial jam.

Below we look at the variables that will help you make the right decision.

What exactly is a personal loan? 

This is the oldest form of borrowing known to man. For centuries people traded food, cattle, jewelry and other goods. Then about 700 BC someone in the Aegean Sea came up with a brilliant idea to make coins. They were much easier than the bushels of wheat or cows, so they were easy to carry. You could also lend your neighbor a few of them and expect to be repaid.

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How the industry was born.

Americans have been borrowing money from each other since the Pilgrims arrived. The transactions became a real business and banks loaning money.

In the famous movie “It's a Wonderful Life” George Bailey gave up his dream to travel the world. He did this in order to manage the Bailey Building and Loan. He became a hero. He also lent a lot of personal loans to the good people of Bedford Falls.

Must know!

You enter into a contract for borrowing money and pay it back in fixed monthly payments - with interest.

The loan is "unsecured" then you don't need to mortgage the property to get one. Lenders are not allowed to claim your car or house if you are default.

How much money can you borrow?

The amount of money depends on your ability to pay it back. You should have a high credit rating and a healthy income. If you don't have that, then you're not likely to get a personal loan of $100,000 without collateral.

In the first quarter of 2018, the average personal loan was $7,986. The default rate was relatively low - 3.5%. In this regard, credit institutions don’t allow consumers to borrow more than they can pay back.

You can use personal loans for anything. But most often these loans use for home improvement projects, financing purchases, business, medical procedures or large expenses (for example, wedding, purchase of household appliances), debt consolidation.

Why are personal loans so popular?

These loans are the fastest growing form of consumer debt. Data provided by online lender LendingPoint in 2018. Mortgages, car loans and student loans account for a large part of consumer debt. Also, this study showed that personal loans are growing very quickly, especially among Millennials.

LendingPoint said that between 2015 and 2018, personal loans doubled among consumers between the ages of 18 and 35. 

Interesting to know!

This boom is fueled by the Great Recession. It's over. However, hard times have taught people not to overexert themselves financially.

The main way to do this is to avoid credit cards as if they had Ebola. Millennial especially doesn't like credit cards. This is because they saw their parents struggle when the economy collapsed.

A Bankrate.com conducted a survey in 2018. The data showed only 33% of people between the ages of 18 and 30 use a credit card. This is about 55% for the age group 31 - 50 years and 62% for people 51-64 years.

The recession also curtailed lending by traditional retail outlets (banks, credit unions), which were hammered with default loans. Financial technology companies like LendingClub, Prosper and Avant  filled the void.

Online lenders had 1% of the personal loan market in 2010. In 2018, they occupy more than 30% of the market. From this we can conclude that traditional lenders are back into the game.

"As a result of the technology movement, opportunity in the consumer space has moved to us Goldman Sachs CEO Lloyd Blankfein told the Economic Club of New York .

When is it advisable to use a personal loan?

If you have a huge number of accounts that grow every month and you want to combine them into one payment then personal credit is a good attack plan.

It is a kind of independent debt management program. You take one big loan to pay off your credit cards. Then you only have one payment per month – it's a personal loan.

But what interest rate you can choose? They range from 5% to 36%. With your credit score plays a huge role in where your bet ends.

If you can avoid a steep end, your interest rate is likely to be lower than the credit card interest rate, which averaged 19.05% nationwide in the first quarter of 2018.

In addition, you pay separately for all these bills to see if it will be more than you pay for a personal loan. If the loan is less, it's time to think seriously about getting it.

The same principle applies for one-time expenses such as medical emergencies, vacations, weddings and home improvements. If you see it's cheaper than putting them on credit cards, do it immediately.

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When will getting a personal loan be a bad step?

You can always find a cheaper alternative.

The biggest attraction of a personal loan is that it doesn’t require collateral. The disadvantage is that interest rates are higher than secured loans.

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How much would you like to borrow?

If you are able to take out a home equity loan or home equity line of credit (HELOC), chances are it will be cheaper than a personal loan.

Mortgage loans amounted to about 5.85% in October of 2018. Rates of HELOC were 6.20%. But you should consider closing costs. You should also remember that your HELOC interest rate is associated with market fluctuations and can grow rapidly.

Refinancing through a debt management program can also be a cheaper option. And it doesn’t involve a loan. To do this, you hire a nonprofit company to consolidate accounts and negotiate lower interest rates and monthly payments. Then you make one monthly payment. All the while, consultants work with you to establish affordable budget and healthy financial habits.

What impact does a personal loan have on your credit rating?

It all depends on whether you pay it back on time. If you do, a personal loan can be a significant boost to your credit score. All credit bureaus love timely payments.

The amount you owe on credit cards is one of the factors that determines your credit score. Ideally, you shouldn’t use more than 30% of your credit limit.

Your account will also improve if your personal loan repays other debts.

Sum up. Should you get a personal loan?

It depends on what you remember reading this article. If your financial situation seems to fit a personal loan, the first thing to do is shop around for a lender.

With online banking it's easier than ever. This will help to compare interest rates, fees and other services of several companies at the same time.

Remember one thing! You won’t escape the debt after you have received a personal loan. You're just transferring debt to a new lender.

Medical emergencies, weddings, vacations and broken furnaces happen. But you may be in worse shape if you're not careful with your restructured finances. So, it's wise and highly recommended to shop around first and compare the lenders before applying:

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Rates last updated September 18th, 2019
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LEND YOU

$35,000
MAX Loan Amount

It’s the maximum sum of cash advance allowed to apply for in the state. It usually ranges from $500 to $1000 for Payday Loans, $1000 - $5000 for Installment loans, and up to $15,000 for Personal loans. But it may vary depending on the lender and his requirements.

4.99%
MIN APR

The minimal percentage allowed that actually represents annual cost of your loan. The APR is based on several things, including the amount you borrow, the interest rate and costs you’re being charged, and the length of your loan.

None, Unsecured
Collateral or Guarantor

Collateral – is some kind of your property which ensures the lender that you will repay the money. Guarantor – is a person that sings the agreement thus giving his guarantee that you will repay the loan. Payday loans are unsecured which means to get cash advance you don’t need either a collateral or guarantor.

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$3,000
MAX Loan Amount

It’s the maximum sum of cash advance allowed to apply for in the state. It usually ranges from $500 to $1000 for Payday Loans, $1000 - $5000 for Installment loans, and up to $15,000 for Personal loans. But it may vary depending on the lender and his requirements.

Varied by state
MIN APR

The minimal percentage allowed that actually represents annual cost of your loan. The APR is based on several things, including the amount you borrow, the interest rate and costs you’re being charged, and the length of your loan.

None, Unsecured
Collateral or Guarantor

Collateral – is some kind of your property which ensures the lender that you will repay the money. Guarantor – is a person that sings the agreement thus giving his guarantee that you will repay the loan. Payday loans are unsecured which means to get cash advance you don’t need either a collateral or guarantor.

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Rates last updated September 18th, 2019
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$5,000
MAX Loan Amount

It’s the maximum sum of cash advance allowed to apply for in the state. It usually ranges from $500 to $1000 for Payday Loans, $1000 - $5000 for Installment loans, and up to $15,000 for Personal loans. But it may vary depending on the lender and his requirements.

6,63%
MIN APR

The minimal percentage allowed that actually represents annual cost of your loan. The APR is based on several things, including the amount you borrow, the interest rate and costs you’re being charged, and the length of your loan.

None, Unsecured
Collateral or Guarantor

Collateral – is some kind of your property which ensures the lender that you will repay the money. Guarantor – is a person that sings the agreement thus giving his guarantee that you will repay the loan. Payday loans are unsecured which means to get cash advance you don’t need either a collateral or guarantor.

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Bad Credit Loans

$5,000
MAX Loan Amount

It’s the maximum sum of cash advance allowed to apply for in the state. It usually ranges from $500 to $1000 for Payday Loans, $1000 - $5000 for Installment loans, and up to $15,000 for Personal loans. But it may vary depending on the lender and his requirements.

5.99%
MIN APR

The minimal percentage allowed that actually represents annual cost of your loan. The APR is based on several things, including the amount you borrow, the interest rate and costs you’re being charged, and the length of your loan.

None, Unsecured
Collateral or Guarantor

Collateral – is some kind of your property which ensures the lender that you will repay the money. Guarantor – is a person that sings the agreement thus giving his guarantee that you will repay the loan. Payday loans are unsecured which means to get cash advance you don’t need either a collateral or guarantor.

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$5,000
MAX Loan Amount

It’s the maximum sum of cash advance allowed to apply for in the state. It usually ranges from $500 to $1000 for Payday Loans, $1000 - $5000 for Installment loans, and up to $15,000 for Personal loans. But it may vary depending on the lender and his requirements.

6,63%
MIN APR

The minimal percentage allowed that actually represents annual cost of your loan. The APR is based on several things, including the amount you borrow, the interest rate and costs you’re being charged, and the length of your loan.

None, Unsecured
Collateral or Guarantor

Collateral – is some kind of your property which ensures the lender that you will repay the money. Guarantor – is a person that sings the agreement thus giving his guarantee that you will repay the loan. Payday loans are unsecured which means to get cash advance you don’t need either a collateral or guarantor.

Available for Bad Credit

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