Do you need to pay for some books for college? Has your deep freezer finally called it quits? Did an unexpected expense suddenly crop up? Are you long overdue for a weekend away? If you answered “yes” to any one of these questions, you may need a personal loan.
We’ll take a closer look at personal loans and show you how you can choose a safe and affordable loan. We’ll also show you which types of loans to avoid. Finally, we’ll show you how you can take advantage of a low-interest personal loan from MoneyLion (yes, even if you have bad credit or no credit!).
Getting a Personal Loan: An Overview
A personal loan is a type of loan issued by a bank, credit union or online lender. Personal loans are unsecured loans, which means that they’re not backed by collateral. This is in contrast to secured loans, which means your bank can seize your assets (such as a car or house) if you stop paying your bills.
Personal loans, student loans and credit cards are all examples of unsecured loans. Unsecured loans are riskier for lenders, so they often have higher credit requirements and interest rates compared to secured loans.
Unlike some other types of loans, you can use a personal loan for almost anything. Some of the most common reasons why people take out personal loans include:
- Covering an urgent home expense, like a plumbing or electric bill.
- Taking a weekend vacation without putting more money on a high-interest credit card.
- Paying for books, lab fees, or other supplies for school.
- Paying off any other unexpected fines or bills.
You can still get a personal loan if you have bad credit or you’re still working to build credit. There are some legitimate banks and online lenders like MoneyLion that can offer lending services to borrowers who have less-than-stellar credit. Some people even choose to take out a small personal loan and pay it back over time to help increase their credit score.
Banks report personal loan payments to credit bureaus and can help you raise your score just like a credit card payment would. MoneyLion offers a membership to help build credit called Credit Builder Plus, with a 5.99% APR loan and reporting to all three credit bureaus.
Keep in mind that there are also some lenders that prey on borrowers who have lower credit scores. No matter how low your score is or how badly you need a loan, never work with a payday lender. Payday lenders are short-term personal loan providers infamous for heavily marketing their loans to borrowers who have low credit scores. These predatory lenders charge very high interest rates for their loans — sometimes up to 400% per year.
Bad credit doesn’t disqualify you from getting a personal loan. However, it can make your search for the right loan a little tougher. Remember to always read the terms and conditions of any loan you consider and know what to look for when you choose a lender.
How to Get a Personal Loan (Even with Bad Credit!)
Need an easy way to get a quick personal loan with bad credit? MoneyLion Credit Builder Plus members can get a personal loan without a credit check. Just follow these steps and get a low-interest loan.
Step 1: Download the MoneyLion App
First, you’ll need to download the MoneyLion app to your smartphone or tablet. The MoneyLion app is available for free on both the Apple App and the Google Play store. Create your account by searching for and downloading the app.
Step 2: Become a MoneyLion Member
You need to open a MoneyLion account after you download the app. Enter your phone number, complete your verification and follow the next steps to create your account.
Under the Patriot Act, MoneyLion also needs to collect a little bit of personal information before you can finalize your account. Enter your name, address and other details when prompted in the app. Finally, upload a valid form of photo identification to finish your account. Some valid forms of photo ID include:
- Driver’s license
- State-issued personal identification card
- Valid military ID
You’ll need to become a MoneyLion Credit Builder Plus member after your account is open. Follow the in-app instructions to complete your MoneyLion Credit Builder Plus application. Don’t worry if you have bad credit — a credit check is never required to become a Credit Builder Plus member and get access to 5.99% APR credit-builder loans.
Step 3: Get Approved for Your Personal Loan
You don’t need to worry about when and if your loan will get approved when you get a loan through MoneyLion. You can submit your request for a personal loan through the MoneyLion app as soon as your account is open.
Characteristics of the Best Personal Loans
It’s not impossible to get a personal loan when you have bad credit or no credit, but it’s a good idea to be picky about which lenders you work with. Here are a few of the things you should look for when you decide on a personal loan provider.
Because personal loans are unsecured loans, banks and lenders usually have limits on the amount of money that they’re able to issue. You can refine your search for a lender by knowing how much money you need to borrow in a personal loan before you begin your search.
A reasonable amount to borrow depends on what you need your personal loan for. You can figure out how much you need by adding up the price of your textbooks, the price of your weekend getaway, etc. Make sure to do this before you start comparing lenders — this will help you easily rule out lenders that don’t offer what you need.
Are you planning to take out a personal loan just to pay it back and boost your credit score? It’s better to choose a smaller loan like MoneyLion’s Credit Builder Plus loan. Smaller loans can be easier to find from trustworthy lenders without a credit check.
Small loans also accrue less in interest because you pay them back sooner. Limit your borrowing to less than $1,000 if you only need a loan to add some variety to your credit profile — and always remember to make your payments on time.
Lenders calculate insurance in terms of an annual percentage rate (APR). Your APR tells you how much money your loan will accumulate in interest when you shop for a loan. For example, if a $1,000 loan has a 20% APR, it means that you’ll pay $200 in interest every year you owe $1,000. High APRs generate more interest, which can make it harder to pay back your loan. Low APRs save you money, so you should prioritize lenders who offer you the best rates.
APR is the reason why it’s so important to avoid payday loan companies when you look for a personal loan. Payday loans often have very high APRs because they’re only supposed to be out for days or weeks at a time.
Payday loans may have interest rates of up to 400% APR, according to data from the Federal Trade Commission. That means that if you borrow $1,000 from a payday loan company, you could find yourself paying up to $11 in interest for every single day your loan isn’t paid back.
Protect yourself and your wallet by avoiding expensive payday loans. Make sure you read and understand your APR before you sign off on any loan. Look for lenders who offer personal loans with low interest rates — anything less than 10% APR is a good deal, even more so if you don’t have good credit. MoneyLion can offer you a 5.99% APR even if you have poor credit.
Can Get it Online
Chances are good that you don’t have time to sit around, waiting to hear back from a loan officer if you need a personal loan. One of the biggest benefits of getting a personal loan from an online or digital bank is that you don’t have to schedule multiple trips to a physical location to coordinate your loan.
Look for a bank that allows you to apply for your loan and submit any necessary identifying information online. The best online loan providers even provide instant approval and deposit your loan into your account as soon as your request processes.
No Repayment or Origination Fees
Some lenders charge you high fees just for writing out your loan in addition to interest payments. Lending fees are common, so it’s a good idea to keep your eyes open for unnecessary fees.
Try to avoid lenders who charge high origination fees. Origination fees cover the cost of drawing up and notarizing your loan. You might see this fee listed as an “administrative fee” instead, but these terms are usually interchangeable.
Next, make sure that your loan doesn’t include any kind of early repayment fee or penalty. As the name suggests, an early repayment fee charges you money if you make your payments ahead of schedule. You may also need to pay the fee if you make more than the minimum payment every month. MoneyLion never charges early repayment fees.
Lenders like to institute repayment penalties because it ensures they make as much money in interest as possible. However, these high fees can be damaging to your repayment schedule, especially if you want to make larger payments to improve your credit score.
Just like when you look for your loan’s APR, make sure you’re reading all of your loan’s terms and conditions before you sign.
Getting a Safe, Online Personal Loan from MoneyLion
Personal loans are a type of credit, which means that you need to use them sparingly and wisely. Like any other tool, these loans can help you or hurt you — it all depends on whether you can make your payments on time.
Take out a small personal loan with a reasonable interest rate and always make your payment on time, and you’ll likely see your credit score rise. Fall behind on your payments, and your score may be worse off than when you took out the loan. Have a plan to pay back your loan before you finish your application.
Looking for a way to get a personal loan online? You can get access to up to $500 in a personal loan that helps build your credit with a few taps on your smartphone as a MoneyLion Credit Builder Plus member. MoneyLion offers loans at an unbeatable 5.99% APR with no required credit checks. Take the next step toward healthier finances and become a MoneyLion Plus member today.