Guide to Personal Loans – TechGenyz

Sometimes, even with the most careful planning, saving, and budgeting, there isn’t enough money to cover all your monthly expenses or pay for an unforeseen emergency or a big purchase. Whether you want to treat yourself to a new TV, go on vacation, or urgently need money to fix your car, personal loans can help cover expenses.

What to consider before applying for a personal loan

Applying for a loan, even for a small amount, is a financial commitment, and to get it right, there are several things you need to consider.

Your credit score

Determining your credit score should be your first step because it determines the types of financial institutions that will lend you and the types of loans you qualify for. There’s a misconception that all financially savvy people have good credit scores while irresponsible spenders have bad credit scores, but that’s not always true. Most of the time, young people have low credit scores which improve as they get older.

A high credit score is above 660, and a few factors are taken into account, namely:

payment history

Your payment history accounts for 35% of your credit score, making it the most critical factor. Banks want to see you have a debt and pay it off on time, so the longer your payment history, the better as long as the debt is paid off on time. This means that you must first have debt to qualify for a loan with good terms.


The amount of money you owe in total to all your creditors is 30% and is the second most important factor. While it’s good to have debt, if you owe too much, it can hurt your credit rating.

Available credit versus the amount you use

Lenders want to compare how much credit you have versus how much you are using. It’s not a good sign if you’ve used up all your credit. But if you still have a good amount available, it improves your credit rating.

Composition of credit

You should have a mix of different types of credit like a mortgage, student loan, and car loan as this shows lenders that you are capable of handling different types of loans as long as you keep up to date with your refunds.

New credit

If you have recently applied for many loans or obtained a new loan, this can negatively impact your credit rating. Although you need credit, applying for several loans at once or applying for a new loan shortly after getting one doesn’t sound good because it signals to lenders that you can’t handle your money.

How much money do you need

Before applying for a loan, you need to be sure of the amount you need. Taking out a bigger loan than you need means you’ll needlessly pay more interest, but you’ll ask for too little and run out. If you are short and apply for another loan, it will count as a new loan and affect your credit score.

The amount you need will determine where you can apply for a loan, as many traditional lenders like banks don’t offer loans below $1,000. If your situation is desperate and you really need a small amount, you may need to apply to a lender who gives smaller loans, but the terms may be unfavorable. In this case, it will be better to compare the terms of a larger loan with the terms of a smaller loan and see which is more profitable.

Loan costs

The costs associated with personal loans vary widely and include loan amount, fees and interest. The costs depend on the type of personal loan, your credit score and the terms of the lender. Costs vary by state. For example, CreditNinja loans in Katy TX will carry different interest rates and fees than a similar loan in New Jersey.

Before accepting a loan, you should carefully review the terms and any associated costs to make sure you can afford to repay it.

Types of personal loans

There are different personal loans available, and your credit rating determines which type you qualify for. Most personal loans are installment loans. You receive a lump sum and repay the borrowed amount, including interest, every month until it is repaid. Personal loans are short term and range from one to five years.

High Credit Loans

Getting a loan with a high credit rating is simple. If your credit score is high, you can get a loan from a bank with a low interest rate and reasonable terms, which will make it easier for you to repay the loan. There are two main types of personal loans:


A secured loan carries the lowest interest rate, but may pose a risk to the borrower as they are required to post collateral. The collateral can be your home, your vehicle or your investment. If you don’t repay the loan, the bank will keep your asset to offset the amount you owe.

Not guaranteed

You don’t need to provide collateral, so your assets are safe. Since the bank takes a risk, the interest on unsecured loans is higher.

Loans with bad credit

People with bad credit may not qualify for a personal loan from traditional lenders like banks. But other lenders offer bad credit loans that usually don’t require a credit check.

Payday loans

A payday loan is an option if your credit score is low and you need money fast. To get a payday loan, you must be at least 18 years old and have an income. You must provide a bank account, phone number and valid ID to apply.

You can apply online or at the lender’s premises. The process is quick and you can receive the money almost immediately or within a day.

It may seem like a fantastic solution to your money problems, but the interest rate on payday loans is high and you usually only have two to four weeks to pay off the loan.

Credit card

Using your existing line of credit means you don’t have to apply for a new loan. You can use your credit card to withdraw cash from an ATM at your convenience by setting a PIN code on your card. Another option is to transfer funds from your credit card to your checking account if you use online banking.

The amount available to withdraw or transfer is less than your swipe amount and carries its own balance.


Pawnbrokers are secured because you have to provide something as collateral. If you have a valuable item like jewelry, a musical instrument, a television or a laptop, you can take it to the pawnshop, where the pawnshop will appraise it and offer you a loan based on 25 to 60% of its value. .

Like payday loans, pawnbrokers have high interest rates and may include other costs like storage fees and insurance. The repayment period is short and you have a month or two to repay the loan. Failure to do so means your collateral will be sold so that the pawnbroker recoups the costs of the loan.

About Judith J. George

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