Advertiser Disclosure

Pay Down My Debt

6 Options When You’re Unable to Pay Your Debt

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Does it feel as if you’re drowning in debt? Do you consistently run out of money before the month is over?

You do have options when you’re unable to pay your debt, whether you’re behind on high-interest credit cards, a car loan, a personal loan, tax debt or even your mortgage.

First, remember you are not alone in accruing massive amounts of debt. Total consumer credit outstanding in the U.S. exceeded $4 billion in December 2018, up 5% year-over-year, according to a report from the Federal Reserve.

It’s important to take a step back, breathe and strategize a plan. You’ll want to create a budget to calculate your monthly expenses so you know how much you have left over to pay your debt. Consider ways you can cut costs or earn more money, perhaps with a part-time job or side gig. Do you have a hobby that can earn you extra cash?

If you study the numbers and realize you don’t have the money to pay your debt, there are steps you can take to get your financial life back on track.

What to do when you’re unable to pay your debt

Staring at a stack of unpaid bills can be stressful for sure. It’s important to open those envelopes so you know where you stand. Ignoring your debt is the worst thing you can do because the interest will continue to accumulate.

It’s also not a good idea to open a new credit card if you can’t pay your existing balances. This may be only a temporary solution to your outstanding debt. And you could face penalties, fees, collections calls and even a lawsuit if your new credit card debt goes unpaid. In a worst-case scenario, creditors can place a lien on your property or garnish your wages.

Instead, consider these six options you could take to better deal with your debt:

Communicate with your lender. Often, lenders are amenable to a payment arrangement if you can explain your circumstances, such as a serious illness, job loss or unplanned expenses resulting from the loss of a loved one. They may also waive late fees.

Check with your creditors to see if one or more of your cards carries credit protection. For instance, protect your total balance up to $20,000, American Express via Assurant®. This insurance allows you to stop payments temporarily while keeping your balance the same following job loss, loss of a spouse or disability. Terms may apply.

Make your payments late. A late payment of fewer than 30 days usually will not be reported to the credit bureaus or affect your credit score, although you will be charged late fees. Your credit score may drop again if an account is 60, 90, or 120 days late. At 150 days late, it could go into collections, which creates a significant event in your credit file. It could take a while for your credit score to recover and that account won’t be reported as “current” even if you pay off the debt. However, late payments may be better than no payments.

Prioritize certain debts over others. While it’s not ideal, juggling payments so that no bill is ever more than 30 days late can help prevent severe delinquencies on your credit report. It’s important to make sure that secured loans, such as a car loan or your mortgage is never more than 90 days late, because this could result in repossession or foreclosure.

Consolidate your debt. If you’ve managed to maintain a decent credit score, it may be possible to get a personal loan at a lower interest rate than your credit cards. With fixed monthly payments and a lower interest rate, you may be able to get out of debt faster. You might also transfer high-interest credit card balances to a card with a 0% introductory offer.

Consider a home equity loan, home equity line of credit (HELOC) or cash-out refinance. Forty-four percent of Americans say they would consider using their home’s equity to consolidate high-interest credit card debt. Using a home equity loan or HELOC to pay off credit card debt can be a smart solution if you make sure not to charge up your credit cards again and continue to make on-time mortgage payments. This can be especially beneficial if you can refinance your home at a lower interest rate so that your mortgage payments stay the same or even go down.

How to handle different kinds of debt

Not all debt is equal, and defaulting on some loans may be worse than others. Consider these different types of debt and how you may manage them.

  • Secured debt: Make every effort to keep secured debt, including mortgages and auto loans, current. If you fall behind, call your lender immediately. The U.S. government offers several programs to help homeowners avoid foreclosure.
  • Student loans: Some student loans may not be considered in default until they are 270 days, or nine months, late. However, going into default on a student loan is serious, and your lender may garnish your wages, tax refunds and any federal benefits to help cover the loan. It is important to take student debt seriously.
  • Tax debt: Tax debt can lead to wage garnishment, property seizure and even arrest. But the IRS has several programs established that could waive fees and help you make a payment arrangement. You should always continue filing your taxes on time and speak to the IRS or a tax professional for help.
  • Other unsecured debt: Your credit cards and other unsecured loans may rack up late fees and interest if you don’t make your payments, but you aren’t in danger of losing your home or vehicle if you can’t pay on time. This debt may not be as high of a priority as other types of debt. However, you should reach out to your creditors to try to negotiate a payment arrangement. It may not be as bad as you think.

If you are able to keep current on your payments, the order you pay down your debt could be reversed. For example, you may follow these three steps:

  • Tackle high-interest debt first to reduce how much you pay in interest each month and to get your debt under control
  • Focus on paying the minimum each month on lower interest loans, such as auto loans.
  • Put more toward savings or other debts when your higher-interest debts are repaid.

The above steps are part of the Avalanche plan of debt repayment, and is one way you can work on your existing debt.

However, you may find that repaying your debts with the lowest balances first keeps you motivated in repayment. This is known as the snowball method and works well if you are the type of person who wants to see small victories along your road to financial freedom.

Budgeting may be your key to long-term financial success

Once your debt is paid off, you’ll need a plan to maintain your financial health.

Track your expenses for a month to see how much you usually spend. Look for areas where you can cut back, perhaps by eating at home more often instead of dining out.

Create a list of your fixed expenses, such as mortgage and utilities. It’s easy to stay on top of these payments if you have the money available.

Be cautious of your discretionary spending. Allocate specific amounts for items like clothing, groceries and entertainment. Start building an emergency savings fund by stashing away a set amount — even if it’s only $10 or $20 — each paycheck. Then, stick to your budget.

If you use credit cards to take advantage of cashback rewards, make sure to pay off your cards at the end of each month so you won’t get hit with interest charges.

Paying off debt is not easy and it can be overwhelming. Take steps to get your debt under control, take the time to pay it off and then future-proof your financial future with a budget and an emergency savings account.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dawn Allcot
Dawn Allcot |

Dawn Allcot is a writer at MagnifyMoney. You can email Dawn here

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Personal Loans

Best Lenders for Secured Loans

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

alternative lending
iStock

Are you considering a secured loan? A secured loan is one that is backed by collateral. For instance, an auto loan is backed by the car you are purchasing. If you don’t make your auto loan payments, your lender can repossess the car.

Other common secured loans include home equity loans and home equity lines of credit. These secured loans use your house as collateral. If you are carrying high-interest, unsecured credit card debt, you can use the equity in your home to get a secured loan at a lower interest rate.

Secured loans are also available to put cash in your pocket without tapping into your reserves. If you have a savings account, stocks or other investments, a secured loan can be a great way to build your credit history or consolidate your debt while holding onto your money.

Getting a secured loan to consolidate debt is a good idea as long as you don’t continue to use the credit cards you just paid off. You can enjoy a lower interest rate and one monthly payment, which can help you keep more of the money you earn and improve your quality of life.

If you are strapped for cash, you may consider other types of secured loans. Beware of secured loans with high interest rates, such as title loans or payday loans. These loans give you money based on a car you own or your upcoming paycheck, but they are often predatory in nature.

Some secured loans allow you to use the cash for whatever you’d like, while other loans pay the money you borrowed directly to the seller of your home or vehicle.

If you need liquid cash fast and have assets in your name, a secured personal loan can help you get the money you need.

LendingTree

Personal loans can help you consolidate your debt, buy a vehicle and pay for home repairs, among many other things. If your credit is good, you can obtain a low-interest personal loan and avoid putting up collateral for a secured loan. Check out LendingTree’s personal loan tool to see if you qualify for a personal loan.

LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by up to five different lenders without impacting your credit score.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

LightStream

LightStream, an online consumer lending division of SunTrust Bank, offers secured loans for the purchase of new, pre-owned or classic vehicles, with a streamlined paperless loan process. Loans may even be processed on the same business day they are initiated.

LightStream offers personal loans for virtually any purpose, including new or used vehicles, home improvements, timeshare purchases, boat or aircraft purchases, or to pay off existing debt.

Most of LightStream’s loan programs are designed for people with good to excellent credit, but LightStream also offers secured loans for vehicles. These secured loans may have looser qualifications and slightly higher interest rates, with the same easy loan process.

APR

3.99%
To
16.99%

Credit Req.

660

Minimum Credit Score

Terms

24 to 144

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

The fine print

LightStream does not list a minimum credit score, but it requires borrowers to fulfill multiple requirements. Those most likely to be approved are borrowers with a credit history of at least five years and a variety of revolving and installment loans on record, few missed payments, cash assets or a proven ability to save, and stable, sufficient income to pay the loan and their other debts.

LightStream offers loans from $5,000 to $100,000 for 24 to 144 months, but only loans of $25,000 and up are likely to get terms of 144 months. Interest rates vary from 3.99% to 16.99% when the borrower opts for automatic payments. Invoiced loans may be 0.50 percentage points higher.

Pros

  • If you qualify for a lower APR with another lender, LightStream will match that APR and reduce it by another 0.10 percentage points, resulting in even greater savings (terms may apply)
  • Paperless process makes it easy to apply for a loan
  • If you apply before 2:30 p.m. EST on any business day of the week, your loan may be approved the same day.
  • Loans are for fixed rates, which means your interest and payments won’t increase
  • No origination fee
  • A satisfaction guarantee means that if you receive the loan and are not happy with the process, LightStream will pay you $100

Cons

  • LightStream does not preapprove borrowers, meaning a hard pull is necessary
  • Secured loans are only available with specific products
  • Loans are not available for more than $100,000 or less than $5,000

If you are looking for a fast and easy loan process and are confident about your credit rating, LightStream could help you get the vehicle you want with a secured loan.

Wells Fargo

As one of the largest banks in the U.S., Wells Fargo provides a variety of loan products at low interest rates. With more than 5,000 branches and more than 13,000 ATMs in nearly every state, as well as online and phone banking options, Wells Fargo is easily accessible to consumers across the country.

Banking with Wells Fargo offers many benefits, including potentially lower interest rates on personal loans, to its customers. For customers who have a certificate of deposit (CD) or savings account with Wells Fargo, qualification could be quicker.

Wells Fargo Bank
APR

6.99%
To
23.99%

Credit Req.

Varies

Minimum Credit Score

Terms

12 to 60

months

Origination Fee

No origination fees

APPLY NOW Secured

on Wells Fargo Bank’s secure website

The fine print

Wells Fargo offers two savings secured loan products: a savings or CD secured personal loan and a savings or CD secured line of credit. CD/savings secured loans are available for terms up to 120 months, in amounts from $3,000 to $250,000. Wells Fargo does not disclose interest rates on its website, but says that secured loans often have lower interest rates than unsecured personal loans. Additionally, Wells Fargo customers can save 0.50% on their secured loan rate. A secured line of credit gives you access to a credit line starting at $5,000 (up to $250,000). There is a $25 annual fee for the line of credit.

Pros

  • You can get approved within hours and have your money by the next business day in many cases
  • You may avoid early withdrawal penalties on your CD with a CD secured loan
  • Money continues earning interest in your savings account.
  • You can enjoy the convenience of online banking and a large network of branches and ATMs

Cons

  • $75 loan origination fee
  • $25 annual fee for a secured line of credit
  • You must have a qualified Wells Fargo savings product to be approved

With a long-standing reputation and locations across the U.S., Wells Fargo provides convenient loan products for its customers. If you already have a Wells Fargo CD or savings account, a CD/savings secured loan is a good way to put your money to work for you.

OneMain Financial

OneMain Financial has been through a number of name changes since it was founded as Commercial Credit in 1912. Today, the financial institution serves more than 10 million customers with branches in 44 states.

OneMain Financial loans, even the secured ones, may have higher interest rates than you may find elsewhere. Its secured loan products, which require collateral such as a vehicle, may offer lower interest rates than unsecured loans.

APR

16.05%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More


Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

The fine print

OneMain Financial makes its lending decisions based on your credit history, income, expenses and the value of the collateral. APRs may range from 16.05% to 35.99%. Secured personal and auto loans are available between $1,500 and $30,000, with terms from 24 to 60 months.

Pros

  • Flexible payment options, including the ability to change your due date
  • Same-day or next-day decisions and funding

Cons

  • High interest rates
  • Must visit a branch to get your loan, even if you apply online
  • Soft Pull required to apply for a loan

Because of the high interest rates, OneMain Financial would not be a top choice for a personal loan for anyone with a good credit score. But if you are in a financial bind and need money for a vehicle or other necessary expense, OneMain Financial’s secured loans can help you get back on track financially.

First Tech Federal Credit Union

First Tech Federal Credit Union was founded in 1952. Founded by employees of Hewlett-Packard and Tektronix, it caters to anyone in the technology industry, including employees of Amazon, Microsoft and Hewlett-Packard.

But you don’t have to work for a tech giant to qualify. You can also join if you work for the state of Oregon or live or work in Lane County. Additionally, membership in the Computer History Museum or the Financial Fitness Association also qualifies you for membership in the credit union.

First Tech Federal Credit Union offers a variety of secured loans that can help you consolidate debt, pay for a major purchase or renovate your home.

The fine print

First Tech Federal Credit Union offers personal loans secured by stocks, CDs or your savings account. You can also use your stocks to back a revolving line of credit with a minimum limit of $25,000.

Interest rates start at 3.00% for a savings secured loan or a certificate secured loan. Borrow as little as $500, or up to $500,000 with a savings or certificate secured loan. Terms are for up to 96 months — or when the certificate matures.

Stock secured loans start at 4.75% APR, and stock secured lines of credit have starting APRs as low as 8.50%. Borrow as little as $25,000 and as much as $1,000,000 with a stock secured loan or line of credit, with terms up to 144 months for a loan. There are no application, origination, refinance or prepayment penalty fees.

Pros

  • Loan payments begin within the first three months for stock, certificate and savings secured loans
  • Receive a decision within 24 hours
  • Great way to build your credit
  • Online and mobile banking features let you make payments and access your money easily when you need it

Cons

  • Only available to First Tech Federal Credit Union members
  • You must have assets in the form of cash, CDs or stocks to get a secured loan

If you have cash reserves, stocks or certificates but no credit history, a secured loan from First Tech Credit Union can help you build your credit score.

A good credit score can help you take advantage of the best rewards credit cards, manage cash flow and help your money work harder for you. First Tech Federal Credit Union has a variety of secured loan products at low interest rates.

Digital Federal Credit Union

Founded in 1979, Digital Federal Credit Union is a tech-forward organization with a wide variety of checkings and savings accounts, as well as CDs, retirement accounts and more.

You can become a member if you:

  • Live in certain parts of Georgia or Massachusetts
  • Work for, are retired from or are related to someone who works for or is retired from one of the credit union’s partner employers
  • Are a relative of a member
  • Get a membership with one of its partner nonprofits

Digital Federal Credit Union offers a variety of loan products, including auto loans, home equity loans and a savings secured loan that lets you borrow against your savings account or CD.

The fine print

The credit union’s secured personal loans let you borrow as little as $200 up to as much as the amount in your savings account or certificate account for up to 120 months, with rates as low as 3.50% for a savings secured loan. Certificate-insured loans have terms up to 120 months, but they are not allowed to exceed the term of the certificate account. Interest rates start at the certificate rate plus 3.50%.

Pros

  • Apply conveniently online or by phone
  • Allows you to build or rebuild your credit
  • Low interest rates
  • Lets your savings work for you

Cons

  • Must be a member of the credit union
  • Rates for certificate secured loans change as certificate rates change

Good credit can help you get better rates on auto insurance and unsecured loans, be approved for a better luxury apartment to rent and take advantage of cash rewards credit cards.

If you have a savings or certificate account but no credit history, a savings secured loan from Digital Federal Credit Union with low interest rates can help you build your credit.

To determine our selection of lenders, we first reviewed those in MagnifyMoney’s personal loan marketplace that offered secured loans. We took APR, terms, origination fee and perks, such as the ability to change your due date, into account. Using those same factors, we then researched other lenders offering secured loans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dawn Allcot
Dawn Allcot |

Dawn Allcot is a writer at MagnifyMoney. You can email Dawn here

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Personal Loans

Top 5 Personal Loan Myths of 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

personal loans
iStock

When it comes to personal loans, many Americans are more likely to turn to credit cards as a way to pay emergency bills, enjoy a dream vacation, or pay for items they can’t afford with cash.

According to Experian, existing personal loan debt was at $273 billion in the second quarter of 2018, while existing credit card debt was at $782 billion in the same period.

But it also shows personal loans with a greater year-to-year change in debt growth than credit cards. Whether personal loans are a viable option for expenses depends, apparently, on who you ask.

Awareness seems to be a key factor. When people are in the dark about financial solutions, they will draw their own conclusions, often leading to false perceptions.

What are some of the myths about personal loans?

5 things people say about personal loans

Myths about personal loans have developed over two centuries, making them hard to debunk.

Fortunately, the internet makes it easier than ever to not just raise awareness about personal loans and to clarify misconceptions, but to find the lowest interest rates and apply for loans.

Personal loans have a difficult and lengthy application process

Before the internet, borrowers had to apply for a personal loan by visiting their bank. During the days of the Morris Plan banks, they often evaluated borrowers based on character and income. This may have meant dressing in your Sunday best and arriving for a meeting with a loan officer with stacks of paperwork, pay stubs and tax returns.

Today, applying for a personal loan is easier than applying for a home equity loan or a mortgage.

You can apply easily online in just a few clicks. Many lenders will ask you to provide your Social Security number, your monthly expenses — including any outstanding debt such as mortgages, car loans, student loans and credit card debt — and your income.

Keep in mind that applying for a personal loan may require a hard credit inquiry and could lower your credit score. If you can, try to pre-qualify for a loan before you apply.

You won’t qualify for a personal loan if you don’t have excellent credit

This common misconception couldn’t be further from the truth. Personal loans are available for borrowers with a FICO Score as low as 500, but you won’t get the best rates with a rock-bottom credit score.

Most lenders look for borrowers with a credit score of 670 or higher. But a score of 800 or more will net you the best terms and interest rates.

Personal loans have lower interest rates than credit cards

Unlike the other myths explored, this one has some truth to it. It all depends on your creditworthiness.

Borrowers with a credit score of 720 or higher get personal loans at an average APR of 7.09%, according to LendingTree data, which is lower than the current 14.73% average APR for credit cards. (Disclosure: MagnifyMoney is owned by LendingTree.)

But if your credit is between 660 and 679, the average APR for a personal loan jumps to 16.72%.

It might be smarter to open a credit card with a 0% introductory APR for balance transfers and pay down as much debt as you can during that introductory period. With on-time payments, your credit score will rise and you can continuing using the same process until your high-interest debt is paid off.

Personal loans have high interest rates

“Personal loans have high interest rates” and “personal loans have lower interest rates than credit cards” might seem to be contradictory misconceptions.

In fact, they show just how much confusion there is about personal loans. Some people perceive the rates to be too high, while others assume a personal loan will offer a lower interest rate than their existing credit card debt.

There is just not enough awareness about personal loans being a good option for many people.

So what’s the truth?

If you have an excellent credit score, you could qualify for a personal loan with single-digit interest rates, which is lower than most credit cards.

Personal loans are also a better option than predatory payday loans, which can have an APR of almost 400%.

But if you own a home, a secured loan such as a home equity loan or home equity line of credit will almost certainly deliver a lower interest rate than an unsecured personal loan.

Personal loans just aren’t right for many borrowers

Many people don’t think of themselves as a good candidate for a personal loan. Maybe they feel their credit isn’t good enough or they don’t make enough money to quality.

Homeowners often consider home equity loans or HELOCs before personal loans. And, of course, the 70 million Americans carrying credit card debt month to month may not have thought about a personal loan.

But you could be a good candidate for a personal loan if you have excellent credit and need cash to consolidate credit card debt, pay medical bills or make a large purchase.

With an easy online application process, personal loans are increasingly becoming a smart choice for many borrowers.

What are your personal loan options?

In spite of the myths surrounding them, personal loans continue to grow in popularity.

In the second quarter of 2018, personal loans showed the greatest year-over-year growth than any other type of loan, according to Experian. Personal loan debt increased by 11.4%.

Borrowers looking for cash to pay off revolving credit cards or remodel their home may want to consider a personal loan. If you’re considering a personal loan, check your credit reports from all three credit bureaus and repair any errors to be sure your credit is in tip-top shape so you can qualify for a lower interest rate.

If your score isn’t where you’d like it to be, take time to pay down existing debt to improve your credit utilization ratio and raise your credit score. Avoid opening or closing accounts before applying for a personal loan since these actions could reduce your score.

As your credit score is increasing, use the MagnifyMoney personal loan marketplace to find a loan with the lowest rates and best terms for your situation. Always remember to do your research, consider all your options and make sure your finances are in order before applying for a personal loan.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dawn Allcot
Dawn Allcot |

Dawn Allcot is a writer at MagnifyMoney. You can email Dawn here

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score