Personal loans Atlanta offer a quick and easy way to fund any purchase or event you might want or need to buy in the future. While these loans can be incredibly helpful, they’re not always the best choice for every situation – so before you apply, make sure you know exactly what you need a personal loan for and whether it’s the right choice for your financial situation. Read on to learn more about how personal loans work and whether or not you should be applying for one of your own.
What are Personal Loans?
Personal loans are used to fund a variety of purchases, and they come with varying maturity periods. While personal loans might sound like they’re meant only for people with poor credit history, they can be useful even if you have great credit. Personal loans are also known as signature loans or unsecured loans, which means that your loan is not backed by collateral. They typically feature low-interest rates because you don’t have to pledge any assets as collateral, although rates vary widely depending on factors such as your credit score and income. If you want to know more about whether or not getting a personal loan is right for you, read on!
Types of Personal Loans
There are several types of personal loans out there, and each has its own set of characteristics. If you’re familiar with terms like fixed and variable interest rates, then you’ll have an easier time navigating through which type is best for your needs. Fixed-rate loans will offer lower initial payments but can rise at any point while variable-rate loans usually come with higher starting payments but fall after a certain period (usually one to five years). At that point, they typically become fixed-rate loans. One way to combat being stuck with an increased payment is by choosing biweekly payments over monthly ones.
Cost of Personal Loans
Unlike secured loans and mortgages, personal loans are unsecured. That means you don’t have to put down collateral like real estate or stocks. Personal loans are also short-term lending products, meaning there aren’t fixed repayment periods (unlike a mortgage loan). Rates may vary, depending on your credit history and income. But in general, rates tend to be higher than conventional debt products. With that said, many borrowers will qualify for better interest rates than credit cards because they provide flexibility with no penalty rate if you’re late on payments. Typical annual percentage rates (APRs) range from 9% to 35%. Your APR depends on factors such as your credit score and income.
Sorts of Fees on Personal Loans
Fees associated with personal loans can vary significantly. The typical fee associated with a personal loan is an origination fee, which is about 5% of your total loan amount. Origination fees are one-time charges; if you roll them into your loan and make regular payments over time, they’ll be amortized and will not have to be paid again. If you apply for a fixed-rate loan, there may also be points that must be paid when taking out your loan—these points add to your interest rate but lower your monthly payment amount, so it’s up to you whether it’s worth it or not.
How to Get Approved for a Personal Loan
To get approved for a personal loan, you need to have decent credit. That doesn’t mean excellent—even just good credit is good enough to be approved. A good credit score will show that you’ve paid your bills on time and don’t overspend, so most lenders will be willing to extend credit to you. They don’t want to take on an irresponsible borrower from who they might not be able to get their money back! To figure out what kind of score you need, it helps to know what lenders are looking for. Most loans require at least a 650 FICO score; 700 or above would make you practically pre-approved.
Benefits of Getting Approved For a Personal Loan
It’s easy to let payments slip when you have numerous loans, each with different due dates. To make sure your payments are on time and in full, set up automatic payments with your bank. Give yourself plenty of time before any payment is due to ensure it doesn’t fall through the cracks. Additionally, take advantage of free services offered by many lenders such as text message reminders and email notifications. This will save you from having to remember when each payment is due yourself. Having all your loans in one place can simplify things further—many banks allow you to view all your loan accounts from one place online or on their app. In addition, consider consolidating multiple loans into one personal loan at an APR that’s likely lower than those for individual credit cards.
Things you should know about Repayment Periods on Personal Loans
The repayment period on personal loans is usually fixed (you pay back what you borrowed in monthly installments over a specific period) and can be long or short depending on your requirements. Depending on your situation, borrowing to pay off high-interest credit card debt can sometimes make sense; however, if you do need to borrow money, try to use as much of your resources as possible—for example, taking out student loans to fund your education will affect how much you repay each month compared with taking out personal loans. Additionally, if you are building a savings cushion that you could use during any unexpected financial bumps in the road during your debt-repayment phase (or at any other point), it’s best not to tap into it unless necessary.