According to NerdWallet, A personal loan is money borrowed from a bank, credit union or online lender that you pay back in fixed monthly payments, typically over two to five years. Lender rates can range from 7% to 36% APR.
Personal loans are typically considered to be “unsecured”– which means there’s no collateral involved. However, rates are usually higher than “secured” loans since they usually have a car or house as collateral in the case of a default. But, when it comes down to it, a personal loan has the ability to be used for just about anything.
And If you’re strapped for cash, a personal loan can be a great way to pay for whatever you need to be done. However, while personal loans can be used for anything, it’s important to remember they shouldn’t be used for everything. So, if you know the types of things they are good for, it can save you a world of stress.
5 Best Reasons To Get A Personal Loan
Personal loans are incredibly flexible and can help you out in a pinch or even as a future precaution. Here are our 5 best reasons to get a personal loan.
Not many want to have to take out a loan for a college education. However, with costs seemingly increasing every year, it’s become tougher to rely solely on college savings. And sure, while there are scholarships and things like FAFSA to help, not everyone may qualify. Even for those who do, you also may only receive a little bit of cash to cover some of your college expenses, but not all.
So, as it stands, unless you’re capable of paying for your education on your own, a personal loan is a great alternative.
Improve Your Credit
It may seem a little odd for some, but taking out a loan and paying it back fully and on time can drastically help your credit. Whenever your score is calculated, bureaus like to look at a variety of things to determine what it is. And more often than not, revolving credit like credit cards and some other loan types can boost your credit.
Even though personal loans are unsecured, and therefore have a higher interest rate, it’s still lower than a credit card. And when it comes down to it, paying off credit card debt with a personal loan can be a great thing to do.
In a weird way, it’ll actually help you save money in the long run.
It’s always best to plan ahead for possible “worst case” scenarios. Take out a personal loan and set aside the money while you’re able to pay it off. You never know when you may need it, and it’s better to have it and be able to pay it off than to desperately need it later down the line.
A Side Business
Maybe you have a great job, but you want a little money on the side. Personal loans can be a great way to start a side business and earn you a little more cash later down the line. It’s an investment for later down the line when you’re raking in the cash. And who knows, maybe the side gig might become successful enough to be your full-time job.
The Three Cs Loan Qualification
In order to determine whether you qualify, Finance Factory looks at the Three Cs: Credit, Cash Flow, and Collateral. Although the ideal credit score is 660+, they’ll look at anything between 600 – 800. As for cash flow, they like to see account balances of $1,000 – $5,000, minimum, but also look at monthly and annual revenue. And when it comes to collateral, Finance Factory primarily focuses on providing unsecured loans; however, they will accept collateral. It’s important to know that you only need to provide one of the Three Cs in order to qualify.
Finance Factory Can Help You Get A Personal Loan
Interested in a Personal Loan? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days, and have a credit score between 600 and 800, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to get started!