If you are facing financial hardship to meet your daily expenses due to rise of prices in everyday commodities, you can get a temporary financial solution by taking advantage of personal loans.
What is a personal loan?
You can take this loan for any purpose, like, repairing your car, paying your utility bills, taking a holiday trip, renovating your house, or paying off your debts. You can get this loan from local financial institutions or from banks.
What are the eligibility criteria?
The eligibility criteria to get personal loans are:
- You should be a salaried person
- You should be an American citizen
- You should be at least 21 years
What are the documents needed?
In order to get approval for the loan, you need to furnish the following documents:
- Your social security number
- Salary stubs of last 2 months
- Bank statements of last 3 months
What are the types of personal loans?
The major types of personal loans are:
1. Secured personal loan: If you want to take a secured personal loan, you have to provide collateral against the loan amount. As the risk to the lender is less, he offers lower interest rate. In case you fail to repay the loan, your collateral will be taken away by the lender. After you submit the loan application, it will take nearly 30 days to get it approved. The loan term is also longer than that of unsecured loans.
2. Unsecured personal loan:Â You can take out an unsecured loan if your credit score is very good. You do not have to provide any collateral for this loan. However, the loan amount will be lower than that of a secured loan. As there is no collateral, the interest rate will also be higher than that of a secured one. The loan term ranges from 6 months to 15 years, depending on the amount of loan you have taken. Loan origination process is much simpler and paperwork required is also very less.
3. Cash advances: If you need some emergency cash you can opt to take cash advances or payday loans. It is easier to qualify and you need to repay the loan when you get your next pay check. You will have to give proofs of your income and employment details to the lender. Generally you need to repay the loan within 2 weeks, but some companies may allow you to repay within a month.
4. Military personnel loans: This facility is offered to the military personnel. The lenders will offer lower interest rate, even if you have a bad credit score. You will also have your own choice of repayment schedule. If you cannot pay back the loan in one payday check, you will be given chances of repaying with consecutive payday checks.
5. Short term personal loan: For this type of personal loan, the loan term is very short and the interest rate is higher. Though many financial institutions do not require any collateral, other than a credit check, a bank may ask you for collateral. However, the amount of loan will not exceed $20,000.
Prior to taking the personal loans, you should shop around and compare the quotes offered by different lenders. You should also have a prior idea of the additional fees charged by the lenders and select that lender, whose quote and other charges best suits your affordability.