You are staying afloat, living paycheck-to-paycheck. Suddenly something happens, and you need fast cash. Borrowing money seems impossible because of a low credit rating, high debt, or past loan denials.
When it comes to cash on hand, 23% of Americans lack savings, and Millennials have less in savings than any other generation. When short on funds, taking out a loan through an online lender can get you through the financial storm.
The online loan process is quick and easy. Before applying for a loan, determine how much money to request. This guide shows how to decide on an appropriate and manageable loan amount.
When applying for a personal loan, consider your immediate needs. If the loan is to cover past-due bills, add them up. Include any additional accounts that may be pending, plus compounding interest fees.
If you have several credit cards and make minimum payments, they accrue interest monthly. How much do you need to pay them all off? If you use funds for this purpose, be careful not to incur further debt on those cards while paying off your loan.
Most personal loans are short-term, meaning you need to pay them off in anywhere from two weeks to five years. Consider the amount of money you need to borrow, then divide that by how many months you will have the loan. This gives you an idea of what your monthly payment will be.
The interest rate you can secure will depend on your credit rating, income level, and past payment history. The greater the risk to the lender, the higher the interest rate. Personal loan interest rates range from 5.99% – 35.99%.
After processing your application, the lender will provide you with the maximum amount you can borrow. Just because that amount of money is available doesn’t mean you should take it. Check the monthly obligation against your budget to ensure you can afford the loan and don’t borrow more than you need.
If you have concerns about repaying your loan, there are budget management strategies you can take. This includes reducing spending habits, getting a second job, selling personal assets, and reducing other monthly bills.
By managing your finances responsibly, you can handle a personal loan without drastically impacting your lifestyle.
The most common reasons for the denial of a personal loan include the following:
Debt-to-income ratio is a comparison of your monthly income against your debt. It deals with the amount of your gross income (before taxes) used to pay rent, credit cards, car payments, and other debt.
To determine your income-to-debt ratio, add up your monthly bills, including alimony, child support, and student loans. You do not need to include utilities, groceries, and gas.
Divide your total expenses by your gross monthly income. The result is your DTI percentage. The lower your DTI, the less risk you are to potential lenders.
If your annual income is $22,000 and your monthly expenses are $1,000, your DTI ratio is 48%. With a standard loan or mortgage, lenders usually require a ratio below 43% and prefer a DTI lower than 36%. Online personal loans can get you the money you need when finances prohibit traditional lending.
If you request a loan for more than a lender feels you can afford, your request may receive a denial. Borrow responsibly, requesting no more than necessary to meet your current needs.
The final reason people receive denials is not completing all necessary information or providing the required documentation. Read and follow all directions for the best chance of approval.
One of the main ways to increase your chance of loan approval is to find a lender that meets your financial needs. You may be tempted to submit applications to several lenders when you need emergency funds fast.
Every lender receiving an application will make a hard inquiry on your credit. This lowers your credit rating. Select one lender and submit your application only to them.
When trying to obtain an emergency loan, you must meet the basic eligibility requirements of being a U.S. citizen or permanently registered alien, have a steady source of income, and be over 18 years old.
Other factors improving your chance of approval include a higher credit score, not applying for more funds than you need, and having a co-applicant.
If your co-applicant has a higher income and credit score, this will increase your chance of approval. Only some people are willing to co-sign a loan because they will be responsible for payments if you default.
In the second quarter of 2022, personal loans made up $192 billion in consumer debt. The average loan amount is $8,085, with interest rates ranging from 5.99% to 35.99%.
Personal loans are unsecured, so you don’t have to provide collateral, such as your car or house. The purpose of collateral is the lender will seize that property if you default on the loan.
With a personal loan, you receive the total amount at one time, usually by direct deposit into your bank account. If the need is due to medical bills, expensive car repairs, attorney fees, or any other purpose, you can take comfort in keeping these matters private while securing necessary funds.
If you are juggling numerous bills, a personal loan will allow you to pay off several bills, consolidating your payment into one monthly obligation. Having one account at a fixed interest rate and predictable monthly payment makes it easier to manage your personal finances.
In addition to no collateral and a lump sum payment, online personal loans have several other benefits. The approval process with no credit check, flexible payment terms, and no prepayment penalties make this an excellent choice.
When you need fast money, determine how much you need and contact Fast Loan Direct. We make borrowing money easy with online forms you can complete in a few minutes.
Fill out an online application today to secure the money you need. We connect you with a lender in our network using the information you provide. Once the lender approves your application, you will receive your funds as early as the next business day.