Personal loans are a great tool for covering unexpected expenses. You can use personal loans to consolidate debt, pay for vacations, cover medical expenses, or even create your own emergency fund.
To qualify for personal loanLenders want to see a healthy credit history and income. But your income doesn’t have to come from a traditional “job.” However, you must have a reliable source of income to reduce the risk of missing payments or default on your loan.
A personal loan has many benefits, but it also comes with risks, especially if your finances are unstable.
If you are looking for a personal loan, you can explore your options: visit Credible to compare rates and lenders…
How to get a personal loan
When a lender decides to finance a loan, they consider several factors, including:
- Credit rating
- Credit history (do you pay bills on time, bankruptcy)
- Debt to income ratio (how much debt you have compared to how much money you make)
- Loan conditions (how much and for how long)
- Collateral (if you choose secured loan)
If you do not have a traditional job with a W2 employer, you can still apply for a personal loan… Potential sources of income that lenders are considering include:
If income is taxed, you can use it as a source of income when applying for a personal loan. When you are ready to check your personal loan options, visit an online marketplace like Credible.
Risks of getting a loan without a job
If you are planning to take out a personal loan and do not have a traditional job, having a reliable source of income is necessary to protect you from defaulting on the loan. If you miss payments, you will be charged late fees. If your payment is too late, it may affect your credit rating… Even two missed payments can lower your credit score. 100 points or more…
Several missed payments can add up quickly, making it harder to catch up. If you miss too many payments, your loan may be overdue.
If your loan is defaulted, your lender may ask you to repay the loan immediately. If you have an accomplice, your lender can ask him for payment. In addition to damaging your credit rating, your partner’s credit rating can also decrease.
As soon as you are late with payments, you will probably start to hear from debt collectors. In the worst case scenario, your lender can withhold your paycheck, post a bond on your home, and / or take possession of everything you used as collateral.
Individual loan alternatives
An individual loan may not be the right choice for everyone. Other options may be better suited to your personal circumstances.
1. Refinancing a mortgage with a cash payment: If you own a home and have a stake in your property, you can take advantage of the lower interest rates and choose cashing refinancing… Cash-back refinancing allows you to replace your current mortgage with a new loan that is more than your debt, and you can spend the additional amount. Your home is the collateral for this type of mortgage, so making payments on time is essential.
2. Equity line of credit: Similar to refinancing, a line of credit uses your home’s equity to determine how much you can borrow. You can borrow from the line of credit as many times as you like, as long as you have the funds available. You can pay off the debt at any time and continue to withdraw funds as needed. Interest is charged only on the amount of your loan.
3. Loan for small business: If you are running your own business, you may qualify for a small business loan. These loans should only be used to cover business expenses. However, they can be used to cover a range of items, from wages to equipment and supplies.
When you’re ready, you can visit Credible to explore your personal loan options or other alternatives available to you.
Using a personal loan to cover unexpected expenses or help expand your spending account indefinitely can be beneficial. But you have a lot to do research and check your finances to make sure you can afford the loan, as non-payment of payments can make your situation worse.
If you are trying to decide if a personal loan is right for you, visit Credible to connect with experienced loan officers and get answers to your personal loan questions.
Have a financial question but don’t know who to contact? Write to the Safe Money Specialist at email@example.com and your question can be answered by Credible in our Money Expert column.