When looking for some extra funds, you will likely come across personal loans. A Personal loan can definitely be helpful for emergency expenses. On top of that, standard unsecured personal loans tend to be fast and easy.
However, you may find several lenders to choose from, and that search can quickly become overwhelming. The good news is that there are several things you can look at when trying to find the best loan and lender for your personal financial situation. One lender you may find on your search is Prosper, and below, you can learn more about them, along with how they compare to CreditNinja.
Finding the Right Personal Loan
The right personal loan for you will depend on a few different factors; here are some things you should consider when trying to find the best personal loan:
The Loan Fits Your Budget Well
Everyone’s budget is different, so it is extremely important to find a personal loan that fits your financial situation. You will want to make sure that you will be able to afford your monthly payments comfortably.
A Personal Loan That Offers Flexibility
The best personal loans offer flexibility for borrowers. You may not think too much about this when searching for a personal loan, but it is essential. Mainly because whatever personal loan you take out can impact your credit score. And if your finances change during repayment or you simply miss a payment, flexibility might be the cushion you need to protect your credit and loan standing. For example, if your lender offers a grace period, a potential late payment may be considered an on-time payment, which may protect your credit score from damage.
Another scenario in which flexibility can be helpful is if you want to make payments on your loan early. Some lenders will charge a fee for early payment, while others may allow for early payments without any costs involved. Being able to repay a loan early may be extremely helpful, as it can help lower the amount of interest and can mean becoming debt free sooner.
A Personal Loan That Covers All Your Costs
Regardless of what kind of loan you are looking at, you will want it to cover the full cost, if possible, for the emergency expense. Juggling multiple loans can become complicated and may not be the best idea. The best personal loan for you should be able to cover the cost of whatever expense you are taking out your loan for.
The Right Personal Loan Will Offer Competitive Interest Rates
The interest rate for a loan is likely going to be the most significant cost, so it will be imperative to find a personal loan with a competitive interest rate for your specific financial situation. Keep in mind that the better your credit score, the better your interest rate, and vice versa. It will be important to be realistic about your interest rate when searching for a personal loan, but also, you shouldn’t settle for your first option either.
What Are Personal Loans Usually Used For?
Personal loans are usually best for short-term emergencies. Here are some ways you can use personal loans:
Medical bills or dental bills: One way a personal loan can be used is to pay medical or dental bills. Although many hospitals and dentists break down a balance into installments, those installments may still be unaffordable out of pocket. Other people may want to not worry about lingering medical or dental debt and pay it off right away. Other cases may require payment before a treatment or procedure, which a personal loan may provide.
Veterinary bills: Another emergency expense that personal loans can be handy for are veterinary bills. Whether you need to pay for a visit, medication, or surgery, a personal loan can be used for an emergency for your pet.
Debt consolidation: Debt consolidation means paying off multiple debts with a single loan. If your debt payments become unaffordable, then a personal loan can work to help. The goal with your new loan would be to get a better interest rate and more manageable repayment terms. If your credit or financial situation has improved since the last time you got loans/credit, chances are you will get better rates and a variety of repayment options.
Everyday expenses: When a financial emergency happens, one of the first things many people have trouble with is their everyday expenses. That can include things like groceries, gas/commuter costs, pet care, and more. The great thing about an approved personal loan is that you will get a lump sum upfront and can use the funds for multiple expenses.
Rent and mortgage payments: Rent and mortgage payments are usually the most expensive but crucial costs most people have every month! And so, if finances change, making your rent or mortgage payment may become difficult. If you need some extra time, a personal loan could help tide you over until you get back on your feet.
What Do I Need When Applying for a Personal Loan?
When applying for a personal loan, you’ll generally need a few documents. Here are some of the documents that most lenders will ask about:
- A government-issued photo ID — a driver’s license, state ID, military ID, passport, permanent resident card, etc.
- Proof of income — pay stubs, bank statements, invoices, letters of income, etc.
- Proof of residency — pieces of mail, utility bills, mortgage, or rent agreements.
- Your social security number or ITIN (Individual Tax Identification number).
- Sometimes a lender may ask for references.
The great thing about applying for personal loans online is that the process can be done from home. You’ll likely have to email or upload your documents online!
How Can a Personal Loan Impact My Credit Score?
A personal loan can impact your credit in a few ways. Initially, any loan you take out will add to your debt, impacting your debt-to-income ratio and credit utilization. Your debt-to-income ratio measures the amount of existing debt you have and compares it to your income. While credit utilization compares your available credit to your current debt. When you take out a loan, both of these ratios will increase. If these exceed 30%, it may hurt your credit. It may also show personal loan lenders a limited cash flow, potentially making them hesitant to approve your loan request.
Another major way that a personal loan can impact your credit score is how you go about paying your loan funds once you take them out. Payment history is actually the largest factor that impacts credit scores, and even a single late payment can hurt them. While on-time payments can really help improve things!
And so, if you don’t want a negative impact on your credit score with a personal loan, here are some tips:
- Review how much debt you have before taking out a personal loan.
- Consider paying off other debts, if possible, before taking on another loan!
- Keep your revolving credit accounts open even if you have already paid them off.
- Figure out the best way for you to remember due dates. Many people use calendars, notes, or set up automatic payments straight from a bank account.
- Be open, honest, and transparent with your lender if your finances change during repayment.
- Take a crucial look at your finances and budget for at least a month’s time to figure out what kind of monthly payment you can afford.
- Consider some of the benefits and drawbacks between a long-term personal loan vs. a short-term personal loan to find the best option for you. For example, longer loans will have a lower monthly payment than a shorter loan, but you may pay more in interest (with the assumption that the loans have the same rates and borrowed loan amount).
- Think about whether you want to add a cosigner to get the best interest rates and flexible loan terms.
- Check all three of your credit reports from the credit bureaus before you apply for a personal loan. That way, you can check for any errors and correct them if needed. You’ll want to put your best foot forward with your application, and having mistakes can hinder your chances of approval.
- Consider refinancing your personal loan if you realize that it is unaffordable after taking out the loan.
What Other Loans Will I Come Across?
When trying to find a personal loan, you will likely come across a few other loan options. Here are some other loan options you may see:
Payday loans: Payday loans are extremely short-term loans that make a small amount of funds available for borrowers. Although they may seem convenient because of their fast process, you may end up paying a lot to borrow a relatively small amount. Along with that, these are usually single-payment loans, which means that you may have to pay the entire loan balance, including interest, at once! Because payday loans usually only give borrowers a few weeks to repay their loan, that can become challenging. This is one reason many people end up in a cycle of debt with one of these loans.
Installment Loans: Installment loans are any type of loan that have steady monthly payments. Personal loans can fall under this category, along with a few other loan options; here are some common examples:
- Home equity loans or lines of credit.
- Student loans.
- Mortgages.
- Business loans.
- Auto loans.
Cash advance loans: Cash advance loans are a type of loan that usually make cash available to borrowers. With these loans, you will usually get a small number of funds that are repaid in a single payment or sometimes in multiple installments. Payday loans, credit card cash advances, and employer cash advances all fall into this category. When compared to personal loans, cash advances will likely be more expensive, potentially offer lower loan amounts, and usually have less flexibility with repayment.
Credit cards: When searching for emergency cash, multiple credit cards will likely come up. Credit cards are a form of revolving credit, which means you can use them multiple times until you reach your credit limit. Interest rates with credit cards can change and are compounding, which can make them quickly add up. When compared to personal loans, generally, credit cards will have stricter credit score requirements and can add more debt to your finances faster.
Loans Like Prosper: What You Need To Know
Prosper is an online lender that has been in business since 2015 and was the country’s first peer-to-peer lenders marketplace. They offer personal loans, home improvement loans, debt consolidation loans, healthcare financing, credit cards, home equity loans/lines of credit, and investment opportunities.
How Do Personal Loans From Prosper Work?
Personal loans from Prosper range from two years up to five, making them long-term personal loans. Interest rates for personal loans may range from 6.99% to 35.99%. The lower end will be for borrowers with better credit scores, while the higher interest rates will be for borrowers who don’t have the best credit. Prosper offers a personal loan amount between $2,000 to $50,000. Your specific amount will depend on your application and finances, including your credit score and income. Prosper allows borrowers to repay their loans without any prepayment penalties. Although they do not state a minimum credit score requirement, they do mention that it may be difficult to get approval with a credit score that is lower than 600. Prosper recommends that if you are denied a personal loan initially, you should apply with a co-applicant.
How Does the Application Process Work With Prosper for Their Personal Loans?
Applying for a prosper loan can be done online with a few steps. To start, you will have to begin a loan application. The first thing they will ask about is how much you want to borrow and why you want to borrow the funds. They will then ask whether you have a co-borrower. From here, you will have to enter some basic personal information about yourself and your finances. This will get you to the pre-approval stage. For final approval, you will likely need to submit documentation to verify all the information from earlier. Once approved for a personal loan through Prosper, the loan proceeds can be sent straight to your bank account.
What Can Prosper Personal Loans Be Used For?
Prosper has a few different categories they provide, which they say their personal loans can be used for. Here are some of them you will find on their website and pre-approval application:
- Debt consolidation.
- Home Improvement.
- Business.
- Auto, motorcycle, RV, and boat purchases.
- Everyday household expenses.
- A large emergency purchase.
- Medical and Dental Expenses.
- Taxes.
What Can I Expect With Repayment From a Personal Loan from Prosper?
When it comes to repayment for a personal loan through Prosper, you can expect, as mentioned above, a repayment plan that may last anywhere between a minimum of two years and a maximum of five years.
Like most other personal loans, personal loans with Prosper will have some fees you may be subject to:
- Origination fees — origination fees make up the different costs that a lender has when creating a loan. Almost every personal loan will have these; think of them as similar to a service fee.
- Check payment fees — Prosper charges a check payment fee if you make a payment via a check, so keep that in mind before paying this way.
- Late fees — Anytime you miss a payment deadline, a late fee will be charged to your loan balance. To get to good standing on a loan, you will have to make your required monthly payment along with the late fee.
- Insufficient funds fees — An insufficient funds fee occurs when a lender tries to pull from an account, and there are not enough funds. And so, if you have a personal loan with Prosper and have automatic payments set up, ensure that you have enough money in your bank account and are mindful of the monthly due date.
When it comes to the payment, you’ll have steady loan payments that will be scheduled every month until the loan is paid off in full. On their website, you will find a few examples that may help you better understand repayment for one of these loans. Here is one of those examples:
“A three-year $10,000 personal loan would have an interest rate of 11.74% and a 5.00% origination fee for an annual percentage rate (APR) of 15.34% APR. You would receive $9,500 and make 36 scheduled monthly payments of $330.90.”
CreditNinja: How Does It Compare?
At CreditNinja, we’ve been offering financial solutions since 2018 and, in that time, have helped over 275,000 borrowers find the financial relief they need! Our goal has always been to help borrowers experiencing difficult financial situations—and we achieve that through our personal loans.
How Do CreditNinja Personal Loans Work?
CreditNinja offers personal loans for borrowers going through financial emergencies. The interest rates for loans will largely depend on your financial information, including things like your credit score and income. Repayment for a personal loan will be in steady monthly payments until the loan is repaid in full.
What Are Some Benefits of CreditNinja’s Personal Loans?
At CreditNinja, we have some unique benefits with our personal loans. Here are some of them you may look forward to:
- You don’t need to have excellent credit to apply for a personal loan with CreditNinja.
- There are no prepayment penalties with our loans, so you can pay off your loan early!
- If approved for a personal loan, you could have funds by the next business day.
- You can apply for a personal loan from the comfort of your home online.
- We have an exceptional customer care team that can help you before, during, and after your loan process.
- Flexible payment schedules so you can rest assured that your new personal loan can fit your budget.
- Convenient loan terms.
What Will Repayment Look Like With CreditNinja?
Repayment with a personal loan with CreditNinja can be easy and predictable. You will get to make steady monthly payments until the full loan amount is repaid. You can make your payments online or over the phone and pay your loan early if you would like.
Is There a Minimum Credit Score to Apply for a Personal Loan With CreditNinja?
No, there isn’t a minimum credit score you will need when you apply for a personal loan with CreditNinja. Borrowers with all types of credit are encouraged to apply for one of our loans! And so, even if you don’t have the best credit score, don’t hesitate to apply.
References:
Personal Loans | Prosper
Debt to Income Ratio vs Debt to Credit Ratio | Equifax