Personal Loans

What is a personal loan?

A personal loan is a type of loan made for a variety of purposes, with the common characteristic of not requiring collateral.  As such, it is considered an unsecured loan.  In contrast to a secured loan, a personal loan usually involves smaller amounts.  In addition to that, the interest rate applied may be a bit higher than an unsecured loan.

According to American Bankers Association managing director for surveys and statistics, Jane C. Yao, the personal loan is a growing type of loan.  As early as 2004, personal loans made up 22.1 percent of nonmortgage loans.

What are the requirements for a personal loan?  The answer to this question would vary depending on the personal loan provider.  Each provider would have its own criteria and requirements.  In general, though, some important factors would be your annual income, your number of years at present employment, and your credit rating.

Are you “subprime”?

This is perhaps the most dreaded word for many borrowers.  When you are labeled “subprime” that means many things – the most glaring and hurtful of all is the higher interest rates applied.  In order to see things in perspective, let’s take a brief look at the other end of the spectrum, where we have the “prime” borrowers.  These people get lower quotes and better terms because of the fact that they have minimal debt and a good credit rating.

So what makes a borrower subprime?  According to financial experts, there is no hard and fast rule regarding this.  Different personal loan providers may actually have different criteria.  We can always talk in generalities, though, and come up with the following:

  • a FICO score of 660 or lower
  • two or more 30-day delinquent payments in the past 12 months, or one 60-day delinquency in the past 24 months
  • a foreclosure or charge-off in the past 24 months
  • any bankruptcy in the last 60 months
  • qualifying debt-to-income ratios of 50 percent or higher
  • limited ability to cover monthly living expenses.

So what happens if you fall under the subprime category?  In the past, you would probably have had to seek out other options.  Today, however, there are personal loans for almost anyone.  Yes, even those with bad credit.  Of course, you have to realize that these kinds of loans would definitely carry higher prices and less desirable terms.

How do I find a personal loan?

With the loan market being as it is today, you have a wide array of options open to you.  This is, of course, good news as you can take your pick and find the best deal.  One way to go about it is to go online.  There are countless online personal loan providers that operate in the Los Angeles area.  They have the advantage of having much lower operating and overhead expenses, which translates to less charges and fees for their products.  More so, doing transactions online also hastens the whole process, making it more convenient for both the borrower and the lender.

Due to the number of options online, you have to take some time to shop around.  Do not make the mistake of falling for the first offer that comes your way.  What you should do is first research several online personal loan providers.  Check which ones suit your needs and preferences and then narrow them down to a handful.  Once you have narrowed your choices down, then it is time to get in touch with them and inquire about their product. 

Do not hesitate to ask questions and seek out answers for the tiniest details that you want.

University Credit Union

So far, I think this is one of the best options.  If you are new to UCLA, the UCU is a non-profit financial institution that was created for employees and families of major Southland Universities.  Since its inception in 1951, its services and products have expanded.  Of course, if you do not qualify as an employee, student, or family of UCLA, then you would have to look at other options.

They offer personals loans as well and some of the features of their personal loan are:

  • 9.95% APR, fixed rate
  • Payments can be based on a 60-month repayment term
  • No application fee or annual fee
  • Borrow as little as $500!
  • One-time disbursement.