Getting a personal loan to consolidate debt, pay off credit cards or tackle that nagging home improvement project is a great way to manage household spending. Other types of loans, like mortgages and car loans, are secured loans used to purchase a very specific item while personal loans can be used for anything. This can mean the qualification guidelines are stricter than for other loans, but there are personal installment loans available for people with poor credit. Whether you’re seeking a loan to pay off other debts or to assist with household cash flow, there are some things you should know as you look for the best personal installment loans for you. Here’s a list of common mistakes some loan seekers make.
Borrowing More than You Can Afford
If you’re consolidating debt or paying off credit cards, a personal loan can make repayment easier. In some cases, you may be able to secure a lower interest rate on the personal loan than the rate you’re paying on your credit cards, saving you money each month over the life of the loan. If, however, you plan to borrow money for a home improvement project or a vacation, carefully consider exactly how much you’ll be able to repay. When you apply for your personal installment loan, you may find you qualify for more than you actually need. Experts recommend only taking a loan for the amount you intend to spend on the project and nothing more.
Applying Only at Local Banks
At one time, a bank was about the only place to get a personal loan. If you needed a loan, you popped into the bank on the corner and spoke with the loan officer. There are so many more options today. Most people are familiar with credit unions, but there are also a variety of online tools that can provide personal loans. Online banks are another avenue, and the latest trend in the loan industry, peer-to-peer lending, makes it possible for you to borrow from strangers, similar to the way Uber allows pedestrians to seek rides and Airbnb helps tourists find lodging.
Not Knowing Your Credit Score before Applying
Repeated credit checks can negatively impact your credit score. Every time you apply for a loan, your credit will be checked. So, increase your odds of finding the right loan by knowing the qualifications for the loan upfront. For instance, if your credit score is 580, seek out lenders and loans designed for people with credit scores in that range to increase your chances for success. If you only apply for loans designed for those with higher scores, you’re likely to see lots of rejection and dings to your credit just from the credit checks.
Failing to Negotiate
You may have room to negotiate, so don’t hesitate to ask for the terms you’d like once you’ve been approved. For instance, maybe you’d like to make fewer payments over a shorter amount of time, or you’d like to increase the loan period, giving you lower payments. Some loan programs will allow you to increase or decrease the life of the loan in exchange for slight changes in the interest rate. So, ask questions and negotiate for the best terms possible for your situation.
If you’re looking for a personal installment loan for poor credit or any other situation, visit our personal loans page to get started today.