Your Complete Guide to Personal Loans

Did you know that more than 20% of American adults have at least one personal loan that they’re paying back at any given time? People have gotten into the habit of using personal loans to pay for all kinds of things, including medical bills and car repairs.

If you’re thinking about trying to apply for a personal loan, you should make sure that you know everything there is to know about personal loans first. It’ll put you in a position to take out one of the best personal loans possible.

We’ve put together a complete guide to help you learn more about personal loans. From what a personal loan is to how to get a personal loan, we’ve covered all the bases for you.

Continue reading to find out all about personal loans so that you can decide if taking one out would be the right move for you.

What Is a Personal Loan?

First things first: Before we start discussing personal loans at length, let’s make sure that you know what a personal loan is. A personal loan—or a consumer loan as it’s sometimes called—is any loan that an individual takes out for their own personal needs.

The “personal” in personal loan is purposely vague. It invites people to apply for personal loans for any number of reasons (we’ll go over a few of them in a couple of minutes). But generally speaking, you can try to get your hands on a personal loan for almost any reason that you want.

This is a big part of the reason why personal loans have become as popular in this country as they have. Many surveys have shown that almost 60% of people don’t have $500 set aside in their savings accounts to take care of emergency expenses. Personal loans help bridge this gap and provide people with the money they need when they’re in a bind.

If you ever need to secure money for one reason or another, a personal loan could be the perfect solution for you. You can use one to borrow anywhere from a few hundred dollars to tens of thousands of dollars.

What Are the Different Types of Personal Loans?

It’s pretty easy to understand the concept behind personal loans. But it’s worth noting that not all personal loans are created equal.

There are quite a few different types of personal loans these days. You should know what they are so that you’re able to select the right one if you ever want to take out a personal loan.

Some of the types of personal loans that will be available to you include:

Debt consolidation loans
Fixed-rate loans
Variable-rate loans
Secured loans
Unsecured loans
Personal lines of credit

If you’re serious about applying for a personal loan, you should take a deeper dive into each of these individual types of personal loans. It will shed some light on which ones might be the best options of the bunch for you.

What Can a Personal Loan Be Used For?

As we alluded to earlier, personal loans can be used for all kinds of things. There is really no limit to what you can use a personal loan for as long as you’re able to get approved for one.

More often than not, though, there are a few common reasons why people will attempt to take out personal loans in the first place. Here are some of those reasons:

To take care of an unexpected car repair bill
To get a medical expense squared away
To consolidate a bunch of credit card balances
To cover moving expenses
To pay for furniture or appliances

If you know that you’re not going to be able to afford to pay for something outright with cash, taking out a personal loan will be the next best thing. It will help you pay for whatever it is you need to pay for while also coming up with a plan for how you’ll pay your loan back.

Who Can Get Approved For a Personal Loan?

In a perfect world, everyone would be able to get approved for a personal loan without a problem. But of course, there are some people who might have a tough time getting approved for a personal loan.

In order to obtain a personal loan, you will have to be at least 18 years old in most cases. You’ll also need to be able to:

Show that you have a steady income
Prove that you have good credit
Provide a little bit of personal information about yourself

In some cases, you might also need to convince someone to serve as a co-signer for you. This will put them on the hook for your personal loan if you are unable to repay it.

Additionally, you might be able to qualify for personal loans for bad credit. They are specific types of personal loans that have been created for those who might not have the highest credit scores in the world. They could be a good option if you’re looking to put the pieces of your financial life back together.

Where Can You Apply For a Personal Loan?

Because there are so many people taking out personal loans these days, there is certainly no shortage of personal loan lenders. In fact, you should be able to find dozens of different options within a matter of just minutes if you would like to apply for a personal loan.

You’re always welcome to apply for a personal loan directly through your bank. But these days, there are also more than a few online lenders out there that will give you the opportunity to apply for a personal loan without leaving home.

You should do your homework on all the options that are available to you and try to find a lender that you can trust. They should have a wealth of experience in the personal lending industry, great personal loan rates, and a reputation that precedes them.

You’ll know that you’re in good hands when you have a personal loan lender like this on your side. They’ll be able to hook you up with a loan that you can pay back without a problem.

How Do You Apply For a Personal Loan?

The good news for those who are interested in applying for personal loans in 2022 is that it has become so easy to do. In most cases, people can apply for personal loans right online within just five minutes, if not sooner.

Once you’ve tracked down a personal loan lender that you feel confident in, you should be able to fill out a loan application right on their website. You can do it by providing this information:

The amount of money you would like to borrow
The time you would like to take to repay a loan
The interest rate on a loan that you feel the most comfortable with
Your name, address, and employment status

Often, this is all that a personal loan lender is going to need to decide whether to approve you for a loan. They might come back and request additional information if they’re on the fence about your application. But even then, you shouldn’t have to jump through too many hoops to apply for a personal loan.

What Should You Look For When Applying For a Personal Loan?

Some people are in such a rush to get approved for a personal loan that they don’t put enough time and effort into researching their options. You should avoid doing this at all costs.

Instead of being in a huge hurry, you should really look at each personal loan option that you receive. It’ll make it easier for you to select a personal loan that will work well for you.

Here are several factors you should consider when applying for a personal loan:

What is the interest rate on it?
How many months/years will you have to pay it back?
What kinds of fees will you be subjected to if you’re approved for it?
Will you get hit with late charges if you don’t make a loan payment on the day it’s due?
Will you have the option to repay it early if you would like?

The more research you do on personal loans, the greater the chances of you finding one with excellent terms attached to it.

What Might Help Your Chances of Getting Approved For a Personal Loan?

If you have an excellent credit score and a high-paying job, getting approved for a personal loan should be a breeze. You shouldn’t have any trouble at all convincing a lender to extend a personal loan to you.

But if you don’t fall into this category, you might need to go the extra mile to get a lender to approve your loan application. Check out a few things you can do to improve your odds of getting approved:

Work on increasing your credit score in the coming weeks and months
Pay down a little bit of debt to make your income-to-debt ratio better
Look for a job that pays more than your current one does
Ask someone to be a co-signer for you

There is no guarantee that lenders will roll the dice on you and approve you for a personal loan even after you do these things. But you can give yourself better odds by doing them.

What Can Hurt Your Chances of Getting Approved For a Personal Loan?

While you can improve your chances of getting approved for a personal loan by taking some of the steps we just talked about, there are also things you might do that will reduce your chances. You should steer clear of doing them at all costs since they’ll make you look like a risky borrower to most lenders.

Here are several things that can hurt your chances of getting approved for a personal loan:

Applying for too many personal loans at once
Attempting to take out a personal loan when you already have another personal loan you’re paying off
Lying about your employment status and/or your salary while applying for a personal loan
Missing debt payments and having them listed on your credit report

If a lender thinks that you’re someone who isn’t very responsible with money, they won’t hesitate to shoot down your personal loan application. It’s why you should make every effort to clean up your credit report before applying for personal loans.

How Long Does It Take to Find Out If You’re Approved For a Personal Loan?

You might think that lenders would want to take their time when considering whether to approve people for personal loans. And to some degree, they do.

If a lender is on the fence about giving you a personal loan, you might have to wait a little while for them to come to a decision. But more often than not, you’ll find out if you’re approved for a personal loan pretty much right on the spot.

This will be especially true for those who apply for personal loans online. Many lenders have made it possible for people to find out if they’re approved for personal loans within just a minute or two at most.

How Quickly Can You Get Cash After Getting Approved For a Personal Loan?

Lenders are doing more than just approving people for personal loans quickly these days. They’re also going above and beyond to put cash into their pockets ASAP after they’re approved.

In addition to providing a lender with personal information when you want to take out a loan, you’ll also usually need to send them your banking information. This way, they’ll be able to deposit money directly into your bank account within just a few days if you get approved for a loan.

Some lenders will even go as far as to provide people with cash on the same day or the next day when they need a loan. This is very convenient for those who need to borrow money fast to take care of an emergency expense.

When Will You Have to Repay a Personal Loan?

The total time that you’re going to have to pay back a personal loan will depend on everything from the lender that you use to your own personal preference.

Some lenders will ask people to pay back personal loans within just six months to a year. These lenders are often the ones that are providing people with so-called payday loans.

Other lenders will give people the choice to pay back personal loans over the course of one, two, or even three years, if not longer. These types of personal loans are perfect for anyone who wants to borrow money without having to worry about repaying it quickly.

If you want to stretch your personal loan payments out over several years, you should look specifically for a lender that can help you obtain a loan like this. It’ll be your best option when you know you aren’t going to be in a position to repay a loan within a matter of just months.

What Will Happen If You Fail to Repay a Personal Loan?

When you first take out a personal loan, you’ll have every intention of paying it back. But over time, you might find that repaying this loan will be a lot more difficult than you anticipated.

At this point, you might wonder what would happen if you just stopped repaying a personal loan. It’s a thought that will, at the very least, cross your mind.

You should know that not repaying a personal loan is not a good idea. It’s going to end up affecting you in all sorts of ways.

First and foremost, your lender is going to report any personal loan payments that you miss to the credit bureaus. This is inevitably going to lead to your credit score going down.

Your lender is also going to charge you a bunch of fees in most cases. This will make your loan balance go up as opposed to down, and it’ll make it harder for you to get back on the right track.

For all of these reasons, you should try not to miss even a single payment when you’ve taken out a personal loan. You should mentally prepare to repay the loan from the beginning and do whatever it takes not to fall behind on payments at any point.

What Should You Do If You’re Struggling to Pay Back a Personal Loan?

If you’re having a difficult time repaying a personal loan, you should be proactive about dealing with the situation. Rather than just skipping payments and not doing anything about it, you should take the following steps:

Call your lender and let them know you’re unable to make a personal loan payment that is due
Give your lender a good reason for why you have to miss a personal loan payment
Ask a lender if you might qualify for a hardship program that they have in place
Commit to giving your lender something so that they have faith in your ability to repay your loan
Stay in constant communication with your lender until you’re able to get back to paying your personal loan off like usual

Some lenders will be a little bit nicer than others when it comes to helping those who are struggling to pay back a personal loan. But even if yours doesn’t fall into this category, you should still contact them and see if they would be willing to work something out with you.

It’s a much better option than the alternative, which is defaulting on a loan and facing the consequences for doing it.

Should You Take Out a Personal Loan?

It has become so simple for people to take out personal loans that not everyone puts the right amount of thought into doing it. You should make sure that you don’t make this mistake when you’re considering applying for a personal loan.

Here are several questions you should ask yourself to see if applying for a personal loan would be the best choice for you:

Do you have a good reason for wanting to take out a personal loan?
Are you eligible to take out a personal loan with good terms attached to it?
Do you make enough money to be able to afford to repay a personal loan?
How long should you realistically give yourself to repay a personal loan?
Is taking out a personal loan going to take a big toll on your financial future?
Are you responsible enough to take out a personal loan and pay it back?

By asking yourself these kinds of questions, you’ll be able to decide if taking out a personal loan is a smart move. You’ll also be able to figure out how large of a personal loan you want to take out, how long you’re going to take to repay it, and which terms you want to look for when applying for it.

Consider Taking Out One of the Best Personal Loans Today

Taking out personal loans is a great way for people to get back on their feet in a financial sense. Whether they’re using them to pay for unexpected bills or utilizing them to consolidate debt, they can be hugely helpful.

We offer some of the best personal loans in the business for those who are interested in applying for them. We invite you to put in a loan application through us to see if you’re eligible to get approved for one.