Personal loans are a great way to acquire the funds you need when life has you down. It can settle old debts or help build your future. If you’re considering a personal loan, you need to know what to look for.
This article will look at the types of personal loans available in Pennsylvania for people with bad credit. Read on to get the info you need!
Pennsylvania: The Basics
Pennsylvania is a state in the northeastern region of the United States. It was founded in 1681 as one of Britain’s original Thirteen Colonies. After America’s independence, it was the second state to join the new nation in 1787.
Pennsylvania has a population of over 13 million people. And it is the 5th most populous state in the country.
Largest Cities in PA
1 Philadelphia 1,603,797
2 Pittsburgh 302,971
3 Allentown 125,845
4 Reading city 95,112
5 Erie 94,831
6 Upper Darby 85,681
7 Scranton 76,328
8 Lower Merion 63,633
9 Bensalem 62,707
10 Abington 58,502
Pennsylvania has been an economic hub of the nation since its creation. It has benefited from booms in the coal and steel industries in the past. Today, it remains a manufacturing, banking, insurance, and agriculture center.
A personal loan is a loan that you get for any purpose you need. An installment loan is one example, which means that it is repaid over time with fixed payments (typically due once a month).
A traditional loan is secured from a financial institution like a bank or credit union. Today, loans can come from a host of different lenders.
Secured vs. Unsecured Loans
Loans in Pennsylvania come in two different forms: secured and unsecured.
Secured Loans are loans backed by collateral. Collateral is an asset that a lender accepts as security for a loan. The collateral might take the form of real estate, a car, or other kinds of assets, depending on the purpose of the loan. For example, a mortgage is a secured loan that uses your house as collateral. If you fail to repay your mortgage, then your lender can foreclose on your house so that they can resell it.
Unsecured loans don’t need any collateral. An example of Unsecured debt is a credit card or student loan. Unsecured loans typically carry higher risks for the lender because there is very little protection if the borrower cannot repay the loan. Instead of being backed by collateral, unsecured loans are backed only by the borrower’s creditworthiness—your overall ability to take on debt and pay it back.
Loans in PA and Your Credit Score
One of the most common ways lenders determine loan approval is through a credit check.
A credit check is something that a lender, bank, or service provider may do when they need to review your finances. In a credit check, lenders have access to information about your existing and past credit accounts, payment habits, and, most importantly—your credit score.
Your credit score is a rating that sums up your creditworthiness. Credit scores come from your credit report, which is a master list of the details of your financial behavior. If you have ever had a loan, credit card, or property in your name, you have a credit report.
Let’s look at the five components of your credit report:
Your payment history is the record of any time you made a payment on one of your credit accounts. After you miss a due date, a creditor (like a credit card company, public utilities, or any other entity you owe) will report your lack of activity to the credit bureaus. Payment history has the most significant impact on your credit; keeping up with your payments tells a lender that they will get their money back on time.
Credit utilization is a ratio that shows how much of your available credit you are using. For example, let’s say you have a credit card with a max limit of $500. At the end of the month, you have racked up credit card debt totaling $100. That makes your credit utilization 20%. You should keep your utilization under 30% to maintain good credit.
Your credit history is how long you have been managing debt. A good or bad history can affect how likely or unlikely you will get a personal loan. When you close a credit account or a credit card, it stays on your report. It’s best to avoid canceling open accounts because they’ll be removed and could shorten your history.
When evaluating someone’s eligibility for credit, new credit is all about the frequency of people applying. If you keep applying for more credit over time, this may be a sign you are in financial trouble. If you are thinking about getting an installment loan, avoid making hard inquiries or pulling your credit report multiple times.
A credit mix represents someone’s ability to manage different types of debt, like credit cards and personal installment loans. A good mix would show an individual’s capability of paying back their debts while maintaining excellent credit. Your credit mix is the least considered factor in your credit report. But a solid combination of loans can help your financial wellbeing.
Good Credit vs. Bad Credit
Your credit activity goes to data collection agencies called credit bureaus. Equifax, Experian, and Transunion are the three major credit bureaus reporting on Americans.
Credit bureaus analyze the information and create credit reports for every consumer, along with issuing a three-digit credit score. Credit scores range from 300-850:
- 300–499 Very Bad Credit
- 500–600 Bad Credit
- 601–660 Fair Credit
- 661–780 Good Credit
- 781–850 Excellent Credit
Separate credit bureaus produce separate credit reports, so your score will likely differ by a few points at each bureau.
People with good credit are considered more trustworthy, so they will have access to loans with lower interest rates and terms that allow for reasonable monthly payments over a more extended period.
Secured and unsecured loans with bad credit are available, but loan terms for these installment loans will differ from those that require higher scores. If you have bad credit and collateral, a secure personal loan may be the best option. Using your collateral could make the difference between denial and approval.
Bad Credit Loans in PA
If you have less-than-perfect credit, it can take a little more work to find a loan that works for you and your budget. Nevertheless, there are solutions for those who need loans.
One of the most common solutions for many bad credit borrowers is payday loans. But beware, as these short-term options tend to carry extremely high interest rates and unfavorable terms and conditions.
The payday loan, a short-term loan, has been around for a while now. It’s a high-cost option that forces the borrower to repay the loan by their next payday. These loans are for people who need instant approval but cannot qualify for other types of credit. A payday loan is most often used to make ends meet.
How Does a Payday Loan Work?
A payday loan online is very accessible but also very risky. In most cases, a borrower only needs to be over the age of 18 and provide these pieces of personal information:
- Valid ID
- Contact information
- Bank account information
You can get a payday loan from a physical location or apply for one of the many payday loans online.
Once you fill out an application, you can expect a loan decision within a day. The lender will send you the money via electronic funds transfer if approved.
Payday Loan Disadvantages
Payday loans are fast, but they can also be costly.
In addition to having very high interest, payday loans can become expensive if not repaid by the end of your term. If a balance remains, most payday lenders will roll it into a new payday loan, which adds extra fees and interest. It is not uncommon for many payday loans to wind up costing more than the original amount borrowed.
Are Pennsylvania Payday Loans Legal?
The Check Casher Licensing Act of 1998 made payday loans illegal in Pennsylvania. This act protects consumers from predatory lending that takes advantage of the working poor.
Pennsylvania has some of the most generous protections for consumers regarding payday loans. This means that lenders cannot charge unexpected, unusually high-interest rates and can’t take legal action against people who cannot repay their debts.
Payday Loan Alternatives
Even though you can’t get a payday loan in Pennsylvania, it doesn’t mean that you don’t have access to loans that can work for you and your budget.
Home Equity Loans
Do you own a home? If so, a home equity loan could be an excellent option for a personal loan. These types of secured loans use your home’s equity as collateral.
Home equity is the difference between the amount of your home’s mortgage and the home’s market value. For example, pretend you have a home with a mortgage for $100,000. Over the years, you have made home improvements and property rates rise in your neighborhood. At your next appraisal, your home is worth $150,000. You have earned $50,000 in home equity.
Your $50,000 of equity can be converted into a cash loan and then repaid in an installment plan that can run alongside current mortgage payments. If you have ever heard the term “second mortgage,” it’s simply another name for a home equity loan.
If you are looking for a home equity loan, it is often the case that mortgage companies offer these. This type of lending offers lower interest rates than those usually found at banks or credit unions.
Home Equity Line of Credit (HELOC)
Instead of a fixed loan, a home equity line of credit (HELOC) gives a line of credit that you can draw from as needed. These differ from traditional loans because they use only part of the equity from your house.
Many people use a payday loan to handle surprise expenses that pop up from time to time. However, there are loans other than payday loans that are just as easy to get and less likely to hit you with hidden fees.
Although we can never plan for all our financial emergencies, you can prepare for some. Emergency hardship loans may be the answer when people face medical expenses or critical home repairs.
Instead of focusing on your credit score, emergency lenders are more likely to consider your payment history and current income. The most important thing for a lender is the assurance you can make your installment payments. You can get an emergency loan without a job, but they will be more expensive than most loans.
Consider prequalifying with several lenders before starting your search for an emergency loan. This way, you will have access to different institutions with varying interest rates and terms, making it easier for you to find the best deal.
Here are some examples of emergency loans:
Pawn Shop Loans
If you live in the United States, chances are you have seen a pawn shop or two. A pawn shop is full of various items, from jewelry to electronics, available for sale at lower prices than other retailers. But did you know that some of those items were once loan collateral?
A pawnbroker can give you an instant cash loan in exchange for a valuable item. Depending on the item, you can get a loan worth up to 60% of the item’s value. With pawn shop loans, you can walk into a shop with collateral and out with money fast, making them even more convenient than any payday loan.
Although convenient, pawnshop loans are as expensive as other short-term cash advances.
A Pawn shop loan usually comes with very high interest rates. Plus, if the borrower misses any payments, they may lose their personal property to the pawn shop.
Auto Title Loans
Car title loans are another quick cash option. But these loans also tend to carry high interest rates. In addition to the unfavorable rates and terms, you risk losing your vehicle if you don’t repay your loan on time.
Credit Card Cash Advance
Cash advances are essentially short-term loans funded by the line of credit associated with your credit card. Withdrawing cash from an ATM or transferring money to your bank account is simple with these types of loans, so they’re just as convenient as a payday loan.
When taking a cash advance on your credit card, you need to be careful because of all the expensive strings attached. One of these is the high-interest rate (paid on top at the same time as your regular APR) and processing fees based on how you withdraw your money.
A credit card cash advance can be a tempting option when in need. Just make sure you’re considering the higher interest rate than regular credit card purchases.
Get Personal Loans in PA with CreditNinja
Are you looking for personal loans in Pennsylvania? CreditNinja can help you get your finances back on track with a cash loan!
The best personal loan you can get is the one you can get as soon as possible. And that’s why CreditNinja’s application process is ready whenever you are.
- Our online loan application takes just a few minutes.
- CreditNinja approves most applications within 24 hours.
- Funds are deposited to your bank account by the next business day in most cases.
CreditNinja customers avoid the hassle and expense of predatory online payday loans with competitive loans and quality customer service. CreditNinja even offers loans for bad credit that can get you the extra cash you need now!
CreditNinja services are available across Pennsylvania. Apply today, or contact us for more information.
- Pennsylvania | Wikipedia.com
- Personal Loans: What to Know Before You Apply
- Payday Lending | Federal Trade Commission
¹Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications approved before 10:30 a.m. CT Monday – Friday are generally funded the same business day. Applications approved after this time are generally funded the next business day. Some applications may require additional verification, in which case, the loan if approved, will be funded the business day after such additional verification is completed.