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What’s a personal loan?

 
It’s an installment loan paid back on a regular schedule and not backed by collateral such as your car or house. It’s different from a car loan and mortgage because the lender cannot seize assets if you can’t pay back your loan. On the flip side our credit score still will be damaged if you can’t paid it back.

 

What are lenders requirement for a personal loan?

 

Good lenders will almost always check your credit history and ask about your income and debt before offering you a loan and deciding on your loan interest. Your loan interest is linked to your credit history (the worst your credit the higher your interest will be), and as you can imagine a higher interest will make it costlier to repay your loan. Personal loan rates always vary between lenders and you can see below how the average interest rates on personal loan can look below.
 

Personal Loan Rates by State and Credit Scores:

 

State Credit Score
Excellent Good Average Bad Poor
720 – 850 690 – 719 630 – 689 580 – 629 below 580
Nationally 6.89% 9.04% 11.34% 18.54% n/a
Alabama 7.1% 11.0% 15.1% 18.7% 22.1%
Alaska 8.1% 10.3% 15.2% 18.3% 24.2%
Arizona 7.1% 11.2% 14.6% 21.0% 21.5%
Arkansas 6.6% 10.3% 13.7% 18.6% 24.1%
California 6.3% 10.2% 13.5% 19.2% 23.2%
Colorado 8.3% 12.4% 15.8% 18.4% 24.1%
Connecticut 6.3% 10.3% 14.5% 18.1% 23.1%
Delaware 7.0% 11.8% 14.3% 18.9% 21.3%
DC 8.2% 12.5% 15.3% 19.2% n/a
Florida 7.6% 10.3% 13.4% 17.3% 21.4%
Georgia 7.2% 12.5% 15.% 18.5% 22.4%
Hawaii 8.1% 10.3% 14.6% 19.8% 24.2%
Idaho 6.4% 9.3% 13.5% 17.6% 20.1%
Illinois 7.7% 10.4% 15.2% 18.4% 23.1%
Indiana 6.1% 10.6% 17.3% 19.1% 21.4%
Iowa 7.3% 11.2% 16.1% 18.5% 24.1%
Kansas 7.2% 10.1% 15.1% 19.4% 23.5%
Kentucky 6.2% 9.8% 14.1% 17.3% 20.1%
Louisiana 6.1% 10.4% 12.9% 18.4% 22.7%
Maryland 8.2% 12.5% 17.3% 19.8% 24.3%
Massachusetts 6.7% 11.1% 14.1% 17.7% 23.7%
Michigan 7.2% 11.3% 16.1% 18.1% 24.4%
Minnesotta 7.7% 11.3% 14.8% 18.6% 25.2%
Missisippi 6.9% 11.5% 14.0% 18.3% 22.1%
Missouri 8.0% 11.5% 15.1% 17.6% 25.1%
Montana 6.7% 10.4% 14.7% 17.4% 20.1%
Nebraska 6.8% 10.2% 14.3% 16.7% 19.5%
Nevada 7.1% 11.5% 15.1% 18.5% 22.6%
New Hampshire 8.1% 12.8% 16.4% 19.8% 25.5%
New Jersey 5.9% 10.5% 15.1% 17.3% 19.6%
New Mexico 6.0% 9.6% 13.2% 17.3% 21.7%
New York 5.7% 8.8% 12.4% 16.8% 20.6%
North Carolina 7.8% 11.4% 14.9% 18.3% 24.4%
North Dakota 6.2% 10.4% 12.9% 16.9% 19.4%
Ohio 6.7% 9.3% 12.8% 16.2% 20.7%
Oklahoma 6.9% 10.4% 14.9% 18.4% 20.7%
Oregon 7.8% 11.4% 13.8% 17.6% 21.8%
Pennsylvania 7.4% 10.5% 17.3% 18.8% 21.8%
Rhode Island 7.1% 9.3% 12.5% 16.6% 22.3%
South Carolina 6.8% 10.2% 15.8% 18.1% 22.9%
South Dakota 5.6% 9.3% 13.6% 16.8% 21.6%
Tennessee 7.3% 10.1% 12.5% 17.5% 22.7%
Texas 6.1% 10.4% 14.8% 18.1% 21.4%
Utah 6.8% 9.7% 12.5% 16.2% 20.4%
Vermont 6.1% 9.9% 14.1% 16.6% 21.1%
Virginia 7.6% 11.2% 14.1% 18.1% 20.8%
Washington 5.6% 12.3% 16.1% 18.3% 21.7%
West Virginia 6.1% 9.9% 14.8% 17.4% 24.6%
Wisconsin 7.8% 12.1% 15.1% 17.8% 21.5%
Wyoming 5.7% 10.2% 14.1% 16.5% 19.9%
Source: MFP’s Users survey (over 16,428 users) who shared personal loan APR interest rate between October 16 2017 and November30 2017.

 

If you have a poor or average credit you could still get an unsecure personal loan if you have a regular income and little debts.

Lenders requirements is you need to be 18 or older, a resident of the U.S., have an available bank account and not be in bankruptcy or foreclosure.

 

What about lenders not verifying your credit?

 

Some lenders do not require you to have a minimum credit score but it doesn’t mean your credit score isn’t checked.

Some lenders provide loans with zero credit check but they’ll charge rates greater thanks 200-300% just like a payday loan lender.

Few lenders approve loans for borrowers with poor credit. With those lender you can expect your rate to be at the higher end (up to 36%). If you don’t qualify for a loan with a normal lender don’t use a payday lender (take a look at alternative lenders such as NixLending.com and BuildingSkills.org instead).

 

The pros of personal loans:

 

  • You can consolidate your debts (credit cards included). You can use a personal loan to consolidate high-interest credit card debt into one payment at a lower interest rate in order to accelerate paying off your debt.
  • It can improve your credit score. You may increase your credit score by moving credit card debt to an installment loan because you lower of your credit use ratio and diversify your debts types.

 

The cons of personal loans:

 

  • You usually get a higher interest rates than a secured loan and most credit cards. When you have good credit and can pay off your debt in 12 to 18 months, you can usually get a 0% balance transfer credit card for a year and pay your balance transfer free of interest. Homeowners can also use a home equity loans with a lower interest rates than a personal loan, and you save money. The con of a home equity loan is your home become collateral.
  • Longer application process. Getting your loan approved may take a few days and require more information that credit cards.

 

When are personal loans good?

 
Personal loans are best when you’ve a long term plan to improve your finances.
 

You can borrow to pay debt faster and for less. You can borrow for other thing (car repairs, wedding, vacation or other things) but only if you know you can make your loan payments.

Don’t borrow to push away the unavoidable. If you want to be debt-free make a plan to do it. If you not able to deal your existing debt, look at your debt-relief options.

When you have decided a personal loan is the right choice, calculate your payments for different range of interest rates and amounts. This way you’ll have a good idea of what you can afford when you get loan offers.

If you have good credit and have already do business with a bank compare online offers with your bank and use online offers as negotiation with your bank and credit union.

Lenders on MFP offer rates no higher than 36%. They also all follow the Consumer Financial Protection Bureau standards and take into consideration of your credit history and ability to repay.