What You Should Know About Personal Loans During a Crisis
Stimulus checks were well-received by the majority of Americans who got them. It was a great starting point for dealing with the havoc wreaked by the COVID-19 crisis on their lives. However, for some, it still wasn't enough. In order to keep progressing forward slowly but surely, a personal loan is an ideal source for a quickly accessible lump sum.
Will It Help?
Yes. A personal loan has no collateral, but requires credit checks and may also include a co-borrower. Rates vary by lender, but start around 6 percent and go up to 15 percent or so. There's no penalty for paying off a personal loan before the end of the loan period, or for paying only the minimum due. You can borrow a little or a lot; some lenders fund loans of up to $50,000.
Is It Possible to Take on a Loan in These Times?
With unemployment still high and wages stagnant, some consumers are worried about whether they’ll qualify for a personal loan. But yes, it’s possible. However, note that most lenders have tightened up on qualification requirements.
This is different from the pre-pandemic days when the decision on taking on a personal loan depended heavily on interest rates. Credit score and income requirements still vary by lender, so shopping around is key.
Thinking of Bank Lenders?
If you have an existing relationship with a bank and you're a good customer with a substantial balance, you may be able to get a lower interest rate or better terms. You can also qualify for a personal loan with a bank lender if you have a family member or friend willing to cosign with you.
The co-signer would become responsible for paying your loan if you were unable to do so, but this doesn't mean you should lean on your signature buddy. Be careful not to overburden your co-signer unless they're financially capable of taking on that responsibility.
Considering a Credit Union?
Unlike banks, which typically require a minimum credit score of at least 650 to qualify for any loan, credit unions may consider your score below 650. Some credit unions even have an alternative credit score system to help people with low or no credit history become eligible for a loan.
Looking Into Online Lenders?
At present, a FICO of 690 or higher paired with a good income greatly improves the possibility of qualifying for an online lender's loan.
Taking on a personal loan during a crisis makes sense because it can help provide money fast for sudden expenses. It's important to consider how soon the funds are needed, important features, the total cost of the loan down the line, and how fast the repayment will go.
If the need arises for a second loan, the underwriting practices and policies of the lender will dictate whether or not it can be taken out.
There is generally plenty of uncertainty during times of crisis. While many Americans benefited just fine from the stimulus checks, others simply could not stretch it enough. Taking on a personal loan is a great way to get a lump sum for immediate needs that can be repaid in small increments down the line.
Trying to take out personal loans in Memphis? Reach out to Central Loan & Finance! We believe nobody should be judged for their past credit. Our experienced manager Michelle has been with the company for 19 years, so you will be in reliable, trustworthy hands. Contact us today!