Best Personal Loan Companies of 2019

What Is a Personal Loan and Should You Get One?

Money that you borrow from a credit union, bank, or one of the best personal loan lenders online is a personal loan. This money will be paid back in monthly installments or fixed payments over a period of two years to as long as five years. The interest rates of personal loans can be as low as 6% and as high as 36% APR (annual percentage of interest paid.

The majority of personal loans are unsecured. That means you do not provide anything of value as collateral for the loan. A secured loan may be backed by your automobile or home and will commonly be much cheaper. But, if you cannot pay the loan the lender can take the asset you used as collateral. As such, a personal loan, even at a higher interest rate may be a better choice if you don’t want to risk losing your car, home, or other personal property. The best personal loan companies let you use the money you borrow for any purpose that you choose.

Short term loan providers will look at your credit report and credit score and your debt to income ratio to decide whether or not to give you a personal loan and what interest rate to offer. The best choice is almost always the loan with the lowest rate.

What Should You Know Before Applying For a Personal Loan?

Before you apply for a personal loan, even with the best money lenders, you should have an idea about what your credit options are. Personal loans along with automobile loans, home mortgages, credit cards, and financing on things like home appliances are all ways to borrow money for the things that you need or want. Borrowing in this way lets you have access to money that you will pay back, with interest, over a specific period of time.

Money from a personal loan can be used for almost any purpose as opposed to money you borrow to purchase an automobile, a mortgage on your home, or financing on a home appliance. And, if you cannot pay the loan you will not lose your car, home, or refrigerator. But, because the best personal loan companies run the risk of losing their unsecured personal loan, they will want evidence that you are able to and likely to finish paying off their loan.

When you pay off a personal loan, even with short term loan providers, you are obligated to make payments on a fixed schedule. Unlike with credit cards, you cannot skip a payment or two and try to catch up later.

Here are some common terms associated with loans that you should know.

Principal: The amount of money that you borrow. This amount decreases as you make monthly payments until your loan is paid off.

Interest: Interest is what personal loan providers charge for lending you their money. Part of your monthly payment will be interest. This is a percentage of the remaining principal.

APR: This stands for annual percentage rate and is important to understand. When you pay off a loan your payments include principal, interest, and any other fees charged by the lender. The APR includes interest and fees and is how you should compare loan offers, instead of just looking at the interest rate.

Monthly payment: This is the cornerstone of paying back your personal loan. The best personal loan companies will set this up so that you pay off your personal loan within a reasonable period of time and with a monthly payment that you can afford.

Applying for a Personal Loan?

You may need money for a short term project, want to consolidate several debts, or even pay medical expenses. Applying for a personal loan with the best personal loan providers may be the best way to go. But, how do you start? How do you pick the best deal? What are good terms for a personal loan and what should you watch out for?

First of all, consider which of the best personal loan companies to use. And, don’t be afraid to check several to see which has the best interest rates, APR, and payment terms. A personal loan is an unsecured loan. You are not offering anything that you own, like your car, as collateral in case you are unable to pay. Thus, personal loan providers will want to see a credit score (600 or better), proof of income, and any other debts that you have. They are lending you their money and charging interest. The rate of interest and other terms that affect the APR will go up to the degree that they worry about you as a credit risk.

Picking the best personal loan lenders is not as simple as choosing the lowest interest rate. Many personal loan providers add various fees to the loans they offer. This increases the payments. APR is the term that is used to include interest and all other yearly costs for a personal loan. APR = annual percentage rate and is what you should use to compare loan providers.

Something that you should watch out for in securing a personal loan is taking the loan with the lowest monthly payment despite it having a high interest rate and APR. A personal loan with a very long payment schedule (and high interest rate) can be extremely expensive over the life of the loan. That is because you will be paying a lot more interest for a lot more years than with a shorter payment schedule.

When you work with the best personal loan companies this will typically not be an issue because they will want to you succeed in paying off your personal loan in a timely manner.

How to Choose a Lender

Choosing the right best money lenders can make the difference between success in securing and paying off a personal loan and failure. The best personal loan companies provide the information that you need to make the best decision for you. The best personal loan providers will give you a very clear rundown of the rates they charge and the other payment terms that they offer.

It is always best to consider at least two or three long or short term loan providers. All of them will want to see your credit score, proof of income, and other information about debts that you have and how you are doing on payments. Because the information is the same, you can get it all together and apply to several of the best personal loan companies and let them “bid” for your business with the best rates and terms.

The best personal loan companies deal with potential clients courteously, answer questions honestly and promptly, and are available when you need them. When you choose a lender, remember that you will be dealing with them over the course of paying off your loan. Pick someone who makes the process easier for you, as well as offering good rates and terms. If you need answers to questions they should be forthcoming and not make you feel like you are pulling teeth to get an answer.

If you have a difficult loan situation, you will want one of the personal loan lenders who will look a bit closer at your situation, your income prospects, and realize that your ability to pay off your personal loan is not just predicted by your credit score or the number of other debts that you have. In fact, an attentive personal loan company may help you with other debts by including them in a consolidation personal loan at a lower and more affordable interest rate.

This gets back to how you are dealt with from the start. The best personal loan providers are straightforward, efficient, easy to deal with, and genuinely helpful in getting you the personal loan that you need.