A personal loan can be a great way to take control of your financial future. Whether you’re looking to buy a new car, taking that dream vacation, or paying for your child’s college tuition fees, the options are limitless.
However, with news of major banks closing down their personal lines of credit, you might be shopping around for the best place to find a personal loan.
Let’s take a closer look at personal loans, which loans to avoid, and how to get a personal loan with low-interest from MoneyLion (yes, even if you have bad credit or no credit!).
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What is a personal loan?
Personal loans, student loans, and credit cards are all examples of unsecured loans. They can be offered by banks, finance companies, credit unions, and peer-to-peer lending sites. The interest rates and credit requirements are typically higher for personal loans than they are for secured loans such as mortgages and auto loans because the lender doesn’t have collateral to take if the loan goes unpaid.
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.
- Consolidating debt
- Buying expensive items like cars and furniture
- Emergency needs like medical visits and covering rent/mortgage
You don’t have to have good credit to get a personal loan. There are banks and online lenders that want to lend you money regardless of your credit history. Take MoneyLion for example, we offer loans to those with less-than-perfect credit with Credit Builder Loans. These loans are paid back over 12 months and they can help raise your credit score by up to 60 points in the first two months.
Banks and credit card companies report personal loan payments to credit bureaus, which helps you raise your score. MoneyLion offers a membership to help build credit called Credit Builder Plus, with a low APR loan and monthly reporting to all three major credit bureaus: TransUnion, Experian, and Equifax.
Steer clear of predatory lenders
Keep in mind that there are also some lenders that prey on borrowers who have lower credit scores. These predatory payday lenders often charge triple-digit APRs — sometimes up to 400% per year. Customers are often enticed with promises of gaining quick money but end up getting into a debt spiral instead.
It is nearly impossible for borrowers to avoid this potentially costly cycle with predatory payday lenders, because they’re often difficult to find and use a service known as “churning”. With churning, customers cannot get out of the contract without paying back the entire amount.
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.
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. It’s important to know how much money you need before you start looking for a lender.
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 30% APR, it means that you’ll pay $300 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.
Apply for loans 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.
Don’t borrow money from lenders who charge high origination fees. These charges 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, If you make a payment early, sometimes you’ll have to pay an early repayment fee. 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.
Bad credit? Get the boost with Credit Builder Plus Loans!
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 credit-builder loans.
Step 3: Get approval
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.
Upon approval, a portion of the funds are given to you same day. The remaining amount will be held in a interest earning Credit Reserve account. Once your loan is paid in full, the reserved funds are released to you and any interest earned will be directly deposited into an active MoneyLion Investment account.
Borrowing money while building your investments has never been easier!
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.
Looking for a way to get a personal loan online? You can get access to up to $1000 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 competitive with no required credit checks. Take the next step toward healthier finances and become a MoneyLion member today!
How hard is it to get a personal loan with bad credit?
MoneyLion Credit Builder Loans are perfect for those struggling with poor credit score. We focus on income, positive bank history and other financial factors to determine eligibility.
Will a personal loan hurt my credit score?
If you default on payments you could damage your credit score. With MoneyLion, you can pay an affordable monthly installments and we’ll report payments to the major credit bureaus.