Personal loans help people finance large purchases minus the high-interest rates that commonly come with credit cards.
Personal loans are used for different expenses like home renovation, weddings, or even debt consolidation. They’re an excellent financing option if you want to avoid high-interest rates or need to make one big purchase.
However you use this financing option, you should be informed of what it entails. This article will answer the most commonly asked questions about personal loans:
How much can I borrow?
How much you can borrow depends on several factors, including your credit score, income, debt obligations, and other financial obligations. Generally, you should be able to borrow up to 50% of your income.
Can I have more than one personal loan?
Yes, it’s common to have more than one personal loan. As long as you can afford it, you can stagger your loans so they don’t come due simultaneously. This will help you keep your debt manageable.
Can I get a loan if I have a bad credit score?
You don’t have to have a perfect credit score to get a personal loan. However, your score will determine your rate and whether or not you qualify for a loan. A score of 640 or better will get you a lower rate and a better chance of approval.
However, a 700+ credit score means you can get a loan with a lower interest rate. Credit scores above 720 will give you a meager interest rate. If you have a meager credit score, find a loan company specializing in high-risk borrowers.
Is a personal loan the same as a payday loan?
No, a personal loan is a different type of debt. In an emergency, personal loans can be an excellent way to get the cash you need. However, you should only take out a personal loan that you can afford.
Because personal loans have a set term, they can help you pay off the debt on time. Personal loans are not short-term loans.
When is the Best Time to Take Out a Personal Loan?
You can take out a personal loan at any time, but it’s best to know when your lender is most likely to give you a favorable interest rate:
If you have a credit score of 720 and up, it will no longer determine whether you’ll get a loan, but it can affect how much you’ll pay for it. For example, if your credit score is 720 and up, your interest rate is likely lower than it would be if your score were lower.
When you have a job, and even with bad credit, you can still get a loan if you have a job and a steady income. When you don’t carry a lot of debt, you’ll have more flexibility to take on a personal loan if you don’t have a lot of debt tied up in other obligations.
The more you owe on other loans, the more limited you’ll be in terms of the amount you can borrow and the interest rates you can expect.
A personal loan is an excellent way to help pay for expenses you can’t afford with just your income as long as you can afford to pay it back when the loan is due.
Bessemer Finance was established in 1984 and is located in the heart of downtown Bessemer across from the historic Bright Star restaurant. For over a half-century, our business has served the hard-working local community. If you are looking to get a personal loan in Bessemer, AL, contact us now!