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What You Should Know About Personal Loans

A personal loan is money borrowed from a bank, credit union, family member, or online lender. Many different types of loans fall into this category. Most have a fixed interest rate that allows borrowers to make predictable payments to repay the debt. 

Personal loans of any size can help individuals and families when they need access to funds. Most people take out personal loans to pay for expenses like medical bills, a move, or a down payment on a home or vehicle. If you are already paying back several personal loans, you may want to consider debt consolidation.


Personal Loan Fees, Interest and APR

Personal loans typically have APRs that range from 5% to 36%. Before applying for a personal loan you should make sure that you understand your interest rate and any fees that you will be responsible for paying.


Terms You Should Know

APR (Annual Percentage Rate) -  Amount of interest charged annually on the loan balance, including fees expressed as a percentage

Interest Rates - The amount a lender charges for the use of assets expressed as a percentage of the principal

Application Fee - Fee charged at the time of application

Origination Fee - Processing or setup fee charged at the start of the loan agreement

Servicing Fee - Monthly fee that covers the administrative costs of the loan, usually a percentage rate of the total loan balance.

Rollover Fee - Fee charged for a payday loan in order to extend the due date of repayment

Late Payment Fee - Penalty fee charged by the lender when payments are late


Personal Loans Online from Legitimate Lenders

You no longer need to go in-person to a bank to get access to consumer credit. Many types of personal loans are available online. When looking for an online loan make sure that you are narrowing your search to legitimate lenders. Answer these questions to ensure that your online lender is reputable.

Does the company require advanced payment?
This is a red flag. Legitimate lenders disclose all of their fees upfront and deduct them from the loan amount rather than asking you to pay upfront.

Is the business address listed and is it real?
Beware of P.O. boxes or addresses that cannot be found online. 

Is the phone number listed? Does someone answer?
Call the number and speak to a customer service representative. They should be able to answer questions about your prospective loan.

Does the company have a corporate email address?
If the company has a personal email or no email listed, this is a red flag.

Is the company in good standing with the BBB?
Check for complaints on the BBB website

If you are uncertain about any of these, it’s best to find another lender. You can also have a lawyer review your loan terms to help spot anything unusual or suspicious.


Best Personal Loans For Bad Credit

If you have a poor credit history, your personal loan options may be limited to bad credit loans. If you have concerns about budgeting for a loan, it’s best to research lenders to find the lowest rate possible.

Lenders charge high-interest rates and fees to compensate for the risk of lending to borrowers without excellent credit. However, the size of the loan does make a difference. Smaller loans under $1,000 may have lower interest rates and monthly payments than larger ones.

In general, the bad credit loan with the fastest approval and payout is a payday loan. Payday loans limit you to the amount of your next paycheck. If you have an existing line of credit (like a credit card) you may be able to take a cash advance. For larger expenses, an online loan for bad credit is may be your best option.

If you need a personal loan to pay off existing loans and consolidate your debt, you should consider a debt relief program as an alternative to a bad credit loan.


Personal Loan Options

Online Loans: typically unsecured, with variable interest rates and higher loan maximums

Cash Advance: a cash withdrawal from an existing line of credit (like a credit card)

Payday Loans: an advance on your paycheck

Home Equity Loan for Bad Credit: a secured loan that uses your home as collateral


Best Personal Loans for Consolidating Debt

Consolidating debt with a personal loan is one way to simplify debt repayment. Paying back multiple debts at the same time can be confusing and inefficient. You may have multiple loans with different due dates, interest rates, and terms.

The best-case scenario for consolidating debt with a personal loan is to get a loan that has a lower interest rate than your existing debt. If you have fallen behind on your bills and have a credit score below 650, it can be difficult to find personal loans with low-interest rates.

Accredited Debt Relief has a debt relief program that can help you settle your debt. We are a trusted company with an A+ BBB rating and years of experience with proven results. Contact us for a free consultation.