Category: Personal Loans

How to Use a Personal Loan to Pay Off Debt

Personal Loan to Pay Off Debt

Debt is ugly business. The more debt you have, the less freedom you have with your own finances and your life overall. It can be hard to break free of the debt cycle – taking out new cards when old credit cards fill up. Paying off a loan with a credit card and paying more fees and interest over time.

It may be hard but it is possible to clear your credit card debt, especially if you choose to use a personal loan to pay off debt. Here’s how it works.

Apply for an unsecured personal loan

A personal loan is a cross between a credit card and a car loan. A car loan is arranged to buy a car – a
secured loan that is tied to the car itself. If you don’t pay the loan, the bank takes the car back. If you
pay the loan on time every month, at the end of the terms you own the car.

A credit card is an unsecured line of credit that is not tied to a new car or any other asset. The bank
trusts you to repay the loan and allows you to keep using the card if you make payments. An unsecured
personal loan is a loan with set payments, like the car loan, that isn’t tied to any asset, like a credit card.
There are secured personal loans as well. Those are typically tied to your home equity or your car title.

You take out an unsecured personal loan much like you apply for a credit card. Fill out the application,
get approved and then the loan is funded. Rather than a credit card, however, the funds are sent to your
bank account where you can use them for the purpose you’ve indicated in the application. The personal
loan can be used to pay for medical expenses, start a new business or, for many of us, to pay off debt.

Pay off your debts

When you apply for a personal loan to pay off debt, you should apply for a loan in the amount of the
debt. Have $10,000 in credit card debt? Get a loan for $10,000. The loan application can be done online
in many cases and once the loan is approved, the funds will be sent electronically to your bank where
they will appear like a direct deposit.

When the loan is funded, you will have a large sum in your bank account. You can use those funds to
immediately pay off all of your debt. You can clear out your medical debts or credit card debts in a single
sitting if you pay everything online. Be careful to not get careless with the funds when they arrive – it
can be tempting when a large amount of money appears in your bank account. Follow your plan and pay
your debts immediately.

Start making personal loan payments

Once you’ve cleared off all of your debts and credit card payments, you won’t owe any more money to
the credit cards or other lenders (provided you don’t charge new purchases on the credit card or take on
new debts.)

With a personal loan to pay off debt you will have a single loan payable to a single vendor. The personal
loan comes with fixed payments, much like a car loan, so you will now start making those payments on a
regular basis. But instead of buying a car, you will be buying financial freedom by paying off all of those
old debts.

The larger the loan, the larger the monthly payment, of course. But if you were making minimum
payments on various other debts, you may find that the single payment for the personal loan is still less
than all of those smaller minimum payments combined.

Pay off the debt

Make your payments on your personal loan every month, on time, and you will see a reduction in how
much you owe. In a short amount of time you will start to see the balance of your personal loan
decrease. After all, this is not a credit card that you keep filling up with new charges. Every payment is
reducing your debt and getting you one step closer to being debt free.

When you have finished making payments on the personal loan, you will have finished paying off your
debt. If you managed to avoid taking on any new debt during the repayment period, you may be
completely debt free and have hundreds of extra dollars every month to save or use for other important
things.

How to Get a Personal Loan with Bad Credit

Personal Loan with Bad Credit

Finding a personal loan can be a real challenge if your credit is less than perfect. Whether you need the loan to cover an emergency expense, consolidate credit card debt, or finance some home repairs, lenders aren’t really interested in anything else besides the number on your credit score.

Yet despite what feels like a total loss, there is some good news: it is absolutely possible to get a personal loan with bad credit. It will take more than a little hard work on your part, though. Here’s what you can do.

Take Stock of Your Credit History

First things first: don’t just start making loan applications willy-nilly. You need to do a bit of preparation to see what you’re working with, and that means taking a long, hard look at your credit history. You’ll need to know not just your actual credit score but also gain access to your entire credit report; there are many free or trial-based online services to get the information you need.

Pulling your credit history is more than just a walk down memory lane — it’s an opportunity to set the record straight if any of your creditors have made a mistake. If you’ve paid off a loan in full but your credit report says you haven’t, you can be sure that’s bringing your overall credit score down. Make sure you clear these errors off your record before moving on to the next step: improving your score however you can.

Why Improving Your Credit Rating is Important

So why is improving your credit score so important? While it’s true you don’t need a perfect credit score to get offered a personal loan, it’s always a good idea to improve your credit as much as possible before you begin applying. There are many lenders out there who will take a risk on someone with credit that’s less than perfect, but the terms of these loans are often pretty rough.

An example of this is the amount of interest someone with bad credit can be expected to pay. Interest rates on so-called “bad credit” loans are usually in the stratosphere in order to offset a lender’s risk, and this means the total cost of the loan to you is going to be greater than if you had better credit.

The Most Reliable Credit Repair Methods

Patching up your credit isn’t as difficult as it sounds. It does require diligence and consistency, though — and the process may take quite some time. One way to improve your credit enough to qualify for a personal loan includes reducing your overall debt. Paying off your existing debt shows lenders you can be trusted to repay any new loans you’re given. If you’re having trouble making minimum payments on the debt you have now, consider contacting your lenders directly and negotiating a new payment plan.

Another way to get a personal loan with bad credit is to find a cosigner to vouch for you. By yourself, you might be too much of a liability to a lender, especially since there’s no way to put up collateral against an unsecured loan. But if you have someone else willing to back you up financially, you’ll be much more likely to secure that personal loan you’re looking for. While not everyone will have friends or family members willing to cosign a loan with you, it is a good option if it’s available.

Watch Out for “Too Good To Be True” Offers

Finally, make sure you don’t get roped into a situation you might regret. If you find a lender that seems to be offering you a large personal loan with terms that seem too good to be true, make sure you take some time to read the fine print before you sign on the dotted line!

Sometimes personal loans can have hidden costs. Beware of lenders charging you “origination fees”, which can tack on additional costs as high as 6 percent of the loan. Also, some lenders will apply a prepayment penalty if you try to pay the loan back early to avoid paying extra interest.

Turn to Match Financial If You Need Help Finding Lenders

Just because you have less than perfect credit doesn’t mean you shouldn’t be able to get a personal loan. If you’re on the hunt for a loan, let Match Financial help you. It’s easy to apply to the lenders we work with. In many cases, you can even expect to receive your cash as quickly as the next day if your application is approved. Don’t let bad credit stand in your way of getting that personal loan you need!

Why You Should Consider a Personal Loan for Debt Consolidation

Personal Loan for Debt Consolidation

How much do you spend in minimum payments every month on your debt? How much do the balances
on those cards and loans change after those payments? Credit card debt can last a long time because
the minimum payments you’re making every month are doing very little to actually attack the balance of
the loan. You are paying primarily interest which makes it hard to get ahead.

If you are stuck in the cycle of minimum payments and credit card debt that seems to be going nowhere
fast, it might be time to consider a personal loan for debt consolidation. Here are a few things to think
about as you determine if a personal loan for debt consolidation is the right step for you.

1. You can arrange an unsecured personal loan to avoid putting your property at risk.

Some loans are tied to things you own like your car or your home. If you are worried about tying your
debt consolidation to the home you’re living in, you don’t have to opt for a secured loan. There are
many lenders who will consider unsecured loans for debt consolidation purposes.

2. A personal loan for debt consolidation can pay off all of your credit cards at once.

Add up the balances on your various credit cards. How much do you owe all together? (This might be
eye opening if you’ve never actually totaled up your debt before.) In most cases, you can take out a
personal loan that covers the full amount you owe on your cards. Owe $25,000 on everything? Get a
loan for $25,000. You can have everything cleared off in short order if you decide to use a personal loan.

3. You might be able pay less every month for your debt.

If you had four credit cards with four minimum payments, you might be paying over $600 per month in
credit card payments. A personal loan for debt consolidation will pay off those four cards and give you a
single payment every month that may be considerably less than the $600 you’ve been paying.
If your budget has been at the point of bursting every month as you tried to cover your minimum
payments, this might be the opportunity to bring yourself some breathing room while still taking care of
your obligations.

4. You will pay off your debt in much less time.

If you make the minimum payments on a credit card you can be working on that card for well over five
years. In some cases you may be working on that card for closer to a decade – and that’s assuming you
don’t use the card for any additional purchases. Since credit cards are revolving debt, it’s hard to get
ahead on the balance because interest is high on previous purchases and you may still be using the card
to make new purchases.

A personal loan for debt consolidation clears off your old credit cards and gives you a single loan to
cover all of the debt. That loan will come with fixed payments, much like car payments, that you will
make every month. When you arrange your personal loan, you will likely have a choice of terms
including the length of the loan. You can arrange to pay off your debt in 24 months, 36 months, 48
months or more depending on your needs and your budget.

5. You can improve your credit score.

Showing that you are managing your debt obligation in a good way will help boost your credit score.
Paying off revolving debt is a plus in the world of credit scores. So is making timely payments on debt. So
is reducing the amount of debt you have overall. That means you may see a jump in your score immediately after using a personal loan for debt consolidation, and you will likely see your score
continue to improve over time as you manage you continue to pay off that loan.

Tips for using a personal loan for debt consolidation:

There are a few things you will want to consider if you plan to use a personal loan for debt
consolidation.

  • Don’t use your credit cards after you pay them off with the personal loan. If you clear off your
    credit cards and immediately use them again you will wind up with twice as much debt – the
    original debt you are paying off with the personal loan and new balances on the cards you had
    just cleared off.
  • Pay more to clear your debt quickly. If you need room in your budget to be sure you’re making
    bill payments on time, a personal loan can reduce your overall debt payments. But if you have
    room in your budget to pay slightly more every month, consider reducing the terms of your loan
    so that you clear your debt in 36 months instead of 48 or 48 instead of 60. This will reduce the
    amount of interest you’ll pay over time and often help you get more favorable terms for the
    personal loan.

Using a Personal Loan to Pay Off Credit Cards

Personal Loans Pay Off Credit Cards

Just about everyone nowadays carries at least a little bit of credit card debt. But if you
feel like you’ve become bogged down with debt and don’t see any way out, don’t worry!
There are lots of ways to reduce your credit card debt.

One of the best is to use a personal loan to pay off a credit card. Here’s what you need
to know and how to do it.

What’s So Great About Personal Loans?

Personal loans are almost tailor-made to help relieve you of credit card debt-related
stress. They have some great characteristics, one of which being an interest rate that’s
fixed for the life of the loan. Not only that, but interest rates on personal loans are
usually much more advantageous than those on credit cards.

That means you’ll be paying less over time than you would otherwise. Even high-APR
loans are still likely to be better for you overall except in the most extreme of cases.
Additional advantages of using a personal loan to pay off a credit card include the fact
that there are no limitations on how you use such a loan. You can use a single personal
loan to consolidate credit card debt, pay for repairs to your home or car, and even use
anything left over to go out to the movies for once. Other benefits include a fixed
repayment schedule with no surprises and not having to put up collateral to take out a
personal loan.

Always Check Your Credit First

It’s absolutely true that a personal loan can be just what the doctor ordered if you’re
finding it a struggle to deal with credit card debt. At the same time, though, you don’t
want to just start submitting applications left and right. There’s a process that you need
to go through in order to ensure you nail the audition, so to speak.

The most important thing you need to do before applying for a personal loan is to make
sure your overall credit rating is in good shape.

You need to check your credit prior to applying because too many loan applications in
too short a period of time can reduce the likelihood of a lender approving your loan
application in the first place. Once you have your credit report in hand, you need to go

through it and search for any possible errors that might bring your credit rating down.
The higher your credit score, the better your chances are that you’ll get a loan with a
good interest rate — and seeing as that’s one of the biggest benefits of using a personal
loan to pay off a credit card, this should be a priority.

Even With Bad Credit, You Can Still Get a Personal Loan

If your credit rating is still less than ideal even after you check your report for any errors,
don’t worry: you can still get a personal loan. There are plenty of lenders out there
willing to take a risk on someone with some black spots on their credit history,
especially since so many people do use personal loans to help rebuild their credit by
consolidating debt in an effort to make it easier to repay. There are a few things you
need to watch out for if this is the case.

Personal loans for bad credit usually still carry a better interest rate than most credit
cards, but they do tend to charge more in interest than a loan issued to someone with
good credit.

Also, some lenders tack on an “origination fee” of anywhere between 1% to 6% as the
cost of processing the loan. Finally, if you plan on paying back your loan early, make
sure you don’t choose one that has a prepayment penalty for doing so.

Use Match Financial to Help You Find the Perfect Personal Loan for You

It’s always best to compare rates and terms from as many lenders as possible before
making a decision on choosing a personal loan to pay off credit card debt.
The easiest and most convenient way is to use Match Financial! We can show you all
the relevant interest rates and repayment terms for all the lenders we work with at a
glance, making the decision easier than ever. Applications are easy as well, and if
you’re approved you can expect to get your money in as soon as the next day in many
cases. Take the first step to better financial health with Match Financial today!

How to Get a Personal Loan

Getting a personal loan has become easier than ever. In many cases you can fill out an application, shop competing rates and secure the loan in a very short time. Personal loans are also a more affordable way to borrow when the need arises. According to the Federal Reserve, a two-year a typical personal loan carries an interest rate of about 10.6 percent where a credit card can easily be twice that amount.

While there are many places to borrow when you’re looking for a personal loan, the process to secure the loan is pretty standard. If you’re looking for a personal loan, you can expect the following steps.

Step 1: Determine your need and budget

You will need to run some numbers before taking out a personal loan. How much are you able to repay on a monthly basis? How much do you need to borrow? You can count on lenders to offer you what they feel is a reasonable amount, but only you know how much you can truly afford and what amount you need in the first place. There are calculators online that can help you estimate how much you can expect to pay every month by borrowing different amounts.

Step 2: Know your own credit score.

Most lenders will base their loan decisions on your credit score. The lower your score, the more risk the bank is taking to lend to you based on your borrowing history. You should obtain a copy of your credit report before requesting a loan so that you know your score and you know that there are not mistakes on your credit report that might affect the bank’s decision.

Step 3: Secured, co-signed, or unsecured?

There are different loans types out there, so before you start shopping you should decide what you’re shopping for. First decide if your credit score is enough for you to get your own loan. If not, you might need to have a co-signer to be approved.

Next, decide if you want to tie your personal loan to an asset like your car or home. You might get a better interest rate, but you will be using your property as collateral. If you don’t want to tie your personal loan to your assets, you will be searching for an unsecured personal loan.

Step 4: Think about why you are borrowing.

Banks and lenders will ask about your goals with the money you are borrowing. They approve loans for different purposes and terms can vary based on your goal for the funds. You may have to provide additional documentation based on your borrowing goals as well. Are you borrowing money to start a business? Pay a medical debt? Consolidate credit cards? Be clear in your purpose before you start filling out applications.

Step 5: Look for the best personal loan rates from lenders.

Remember that you can get a personal loan from lots of places – not just traditional banks. It is not in your best interest to take the first loan that is offered to you. Check the rates at traditional banks, with peer-to-peer lenders, with credit unions and online lenders.

Because many of these lenders will check your credit during this process, you will want to work quickly to check rates with various lenders. Every ping on your credit score can lower your score, so consolidating your credit checks can help keep your score consistent for borrowers and minimize the effects of the credit check.

Step 6: Apply for a personal loan.

Once you have an idea of the rates available to you, pick your best option and complete the application. You may be able to do this process online or you may have to visit a bank or credit union in personal to finalize the process.

You can expect to provide your name, address, contact information, loan purpose, income and
employment information as well as your social security number for a credit check. During the
application you will be offered terms for the loan including the official interest rate and the repayment terms. Be sure to read the materials carefully and ensure the loan will meet your needs.

Step 7: Provide all of the documentation required.

Some lenders won’t require any documentation at all for a personal loan. Others may request a copy of your paystub or driver’s license. If you are using a secured loan, you may have to show a copy of your deed or driver’s license. You won’t get funds until all paperwork is sorted, so don’t delay on this step in the process.

Step 8: Wait for funds and start repaying the loan.

Once you’ve submitted all documentation and your loan is officially approved, you will receive funds. Some lenders provide funds quickly, others can take up to a week or two to fully fund a loan. Once you have the funds, you can use them for your purposes, of course. You must also begin making payments on your loan to repay the amount. Check for discounts for setting up automatic payments or repaying the loan early.