How to get a personal loan & other FAQs
As the old saying goes, you have to spend money to make money. A renovation might increase the value of your home, but most homeowners don’t have the cash on hand to pay for such a project. Whether you’re looking to add to your home or celebrate a once-in-a-lifetime event like a wedding or special vacation, a personal loan can provide the financial flexibility you need.
Learn more about the ins and outs of personal loans, including how to get a personal loan, and then get updates when the experts at Guaranteed Rate make personal loans available in your area.
What is a personal loan?
A personal loan provides financing for borrowers looking to make a large purchase or consolidate their debts. These funds are usually handed over in one lump sum and repaid through installments over time.
Unlike mortgages or student loans, personal loans can be used for a variety of purposes. This flexibility allows borrowers to pay for a wide range of expenses, such as medical bills or home renovations.
While personal loans can be taken out to settle existing debts or make a large purchase, the savvy borrowers will use these loans to add value to an existing asset. For example, a personal loan can be used for home improvement projects, giving the property a boost in value and increase your level of equity in the home.
When applying for a personal loan, you’ll request a specific amount from a lender. The lender will decide whether to issue you a personal loan based on all the usual factors, such a review of your credit report, debt history and available finances. If you’re worried about your eligibility for a personal loan, you can compare what rates and terms you qualify for with different personal loan providers before selecting a lender .
When you to shop around for a personal loan, check the rates of multiple lenders and gain a clear picture of your own borrowing limits and projected payment plan.
Comparing different personal loan terms also helps you understand what type of loan suits you best as well as how much you’ll pay in interest over time. Depending on your needs and eligibility, the amount you pay in interest can vary. Before sending in an application, you should understand the differences between lenders. Make sure you pay attention to the final terms as unlike Guaranteed rate personal loans that have no fees, some lenders have hefty origination or prepayment fees which you will need to consider in addition to interest rate.
Personal Loans Compared to Other Loan Types
Personal loans aren’t your only option when you’re looking to consolidate debt, complete a home improvement project, or plan an event, but a personal loan may be your best option. HELOCs, home equity loans, credit cards, and borrowing against your 401k are other common options. However, they can come with disadvantages. Potential challenges you need to be aware of includ:
Way of borrowing money
Home Equity Line of Credit**
Your home is the collateral for the loan.
Home Equity Loan
Your home is the collateral for the loan.
Interest rates are often much higher on credit cards than personal loans.
Borrowing against 401K
If you don’t repay the full amount, the entire balance may be taxable.
What is the benefit of obtaining a personal loan?
Other forms of credit, such as mortgages or student loans, require you to use the loan for a specific purpose. A major benefit of a personal loan is its usefulness for a variety of scenarios.
Personal loans and large expenses
Personal loans provide an excellent option for borrowers facing a sudden and unexpected need for financing.
Property damage and litigation issues might be partially covered by your homeowners insurance plan, but can remain costly even after the insurance company helps out. Unexpected costs like medical bills can also be covered by a personal loan.
Many borrowers use personal loans to add value to an asset. Personal loans can be taken out to fund home improvement projects or for new equipment or services to help a business.
Personal loans and consolidating debts
High interest credit card debts are not only a strain on your bank account, but keeping track of multiple monthly payments is often time-consuming and exhausting. If you’re having difficulty managing several repayment plans, combining all of your debts into one is possible with a personal loan.
By taking out a personal loan to consolidate your debts, the lender provides a lump sum that settles the debt with your creditors. Since all of your creditors have now been paid back in full, you’ll only have to focus on a single payment structure with your lender.
Solving a debt problem by taking out an additional loan might seem counterintuitive. However, consolidating several of your debts into one monthly, low-interest payment can simplify your finances and streamline debt repayment.
How to get a personal loan?
Whether you’re looking to make an investment, consolidate debt, or pay for unexpected expenses, a personal loan provides the support you need. Before applying, consider seeking pre-approval to get a better understanding of your borrowing capacity and what type of personal loan works best for you.
* You must be 18 years of age or older. To qualify, a borrower must be a US citizen, a permanent resident, or a non-permanent resident in the US on a valid, long-term visa. All loan applications are subject to credit review and approval as well as income and employment verification. You must meet our minimum requirements established for this offer including, but not limited to, credit history, debt-to-income ratio, and application information. Your actual rate depends on your requested loan amount, loan term, creditworthiness, and a variety of other factors. Loan amounts range from $4,000 - $50,000. Rates and loan amount may differ due to state specific requirements and may impact your ability to qualify for a loan. Limitations: CA (rate and amount), FL, ME, NC, TX and VT (rate), IL, MA, RI (amount). The lowest rate advertised is reserved for the most creditworthy borrowers. Advertised rates and terms are current as of 8/10/2022 and are subject to change without notice.
Guaranteed Rate, Inc. home equity line of credit (HELOC) is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. This product is currently not offered in the states of New York, Utah, Kentucky, South Carolina, Hawaii, Texas, West Virginia, Delaware and Maryland. The HELOC requires you to pledge your home as collateral, and you could lose your home if you fail to repay. Borrowers must meet minimum lender requirements in order to be eligible for financing. Available for primary, second homes and investment properties only. Dependent on minimum credit score and debt-to-income requirements. Occupancy status, lien position and credit score are all factors to determine your rate and max available loan amount. Not all applicants will be approved. Applicants subject to credit and underwriting approval. Contact Guaranteed Rate for more information and to discuss your individual circumstances. Restrictions Apply.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate. Guaranteed Rate its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.