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Comparing Personal Loans from Direct Lenders

Comparing Personal Loans from Direct Lenders

Finding a personal loan from a direct lender online provides many benefits over loans from banks, lending networks, and government and community-based lenders.

  • Direct lenders may approve loans in-house.
  • Their risk assessment process may have more flexibility.
  • There are sometimes fewer third-party costs that need to be passed along, such as the extra fees charged by loan brokers.
  • Direct lenders are known to safeguard financial data and might be less likely to sell information about a borrower’s account and search habits.

Borrowers may receive faster decisions on small personal loans, which are often made within a few minutes, so there’s no need to wait on a prolonged decision process.

Online Direct Lenders Provide Convenience and Borrowing Choices

Online personal loan direct lenders may offer a variety of loan products that can include shorter-duration loans, installment loans, and personal loans designed specifically for key projects, such as vacation loans, loan consolidation, car loans, and home improvement loans. Unlike with banks, however, borrowers may not be obligated to use the money for a specific purpose.

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Online loans can be fast, easy, and available even for those with limited credit history. It is a funding source that may work for a variety of financial needs, like:

  • Loans for home remodeling and improvement
  • Repairs of vehicles and property
  • Personal loans for business
  • Educational expenses
  • Vacation loans
  • Debt consolidation
  • Personal or investment opportunities

Borrowers may qualify with a range of credit scores. Direct lenders offer loans with low rates of interest for people with excellent credit, but the rates climb higher as credit scores drop. The important thing for borrowers to do is to analyze the offers to determine if they are affordable.

The Benefits of Getting Online Personal Loan Direct Lenders

Many banks and credit unions offer long-term personal loans, but qualifying often becomes a hassle for those with less-than-stellar credit scores. Direct lenders sometimes offer easy personal loans or funding options that are more suitable for those with lower scores or limited credit history.

The best practice is to compare direct lenders and types of loans. Determine the annual percentage rate, or APR, to compare loans with short-term and long-term payments. Interest rates are usually lower for long term loans but higher for emergency personal loans with shorter terms.

Loan terms for online personal loan direct lenders vary significantly according to the borrower’s credit score, credit history, and length of the loan. Comparing loan offers and lenders is the first step of responsible borrowing. Consumers should also research the lenders for complaints, business history, and other critical information.

Reasons for Applying Direct Lender Personal Loans

Direct lenders with no third party may have greater flexibility in the criteria they use to approve a loan, so people with poor credit can sometimes qualify for quick personal loans. The options include unsecured personal loans, secured loans, credit card offers, community-based funding, and even government loans for specific purposes. Here is a little more information about products sometimes available from direct lenders:

Unsecured Loans

These loans have become more popular, probably due to their easy availability online. The loans come in two basic types: loans with shorter terms and those with longer terms. These loans don’t require collateral, so they’re considered riskier than secured loans. Getting an unsecured loan from a bank or credit union requires a good or excellent score, but people with poor credit may qualify for quick loans at many direct lenders.

Credit Cards

 These are a specific type of unsecured loan offered by banks, department stores, and other organizations. Introductory offers often feature low-interest or zero-interest rates for a short period. If credit card users repay their full balances before the end of the billing cycle, there is no interest charged. It is important to understand all the details of any credit or loan offer, including the amount borrowed or credit limit, penalties for late payments, prepayment penalties, APR, total finance charges and any fees. People with poor credit can often qualify for credit cards with small limits, but higher interest rates usually apply.

Secured Loans

These loans are a workable option for many people with poor credit if they have collateral such as home equity, retirement accounts, stocks, jewelry, or other valuables. The property serves as collateral, and it will be collected and liquidated if the loan isn’t repaid. The most common secured loans use collateral like the borrower’s house or car.

Shorter-duration Loans

These loans are meant to be repaid in full after a short period. These are usually for smaller amounts of money, depending on how much the borrower earns and how often he or she is paid. The short repayment period means that lenders don’t earn a lot in interest, so the interest rates are considerably higher than other loan products. These loans aren’t meant for long-term financing.

Specialty Loans and Programs to Consider

Finding a personal loan direct lender isn’t the only option for borrowers, and it’s worth checking out different programs that can deliver better loan terms. Some of the unconventional loan options available to consumers include:

FHA and VA Loans

These programs can provide secured loans based on the borrower’s home equity. The VA program offers to refinance loans up to 100 percent of the home’s value for borrowers with credit scores as low as 500. The FHA offers to refinance up to 90 percent of the home’s value. Of course, borrowers also are limited by the equity they’ve built over time.

SBA Loans

These small business loans are available to small business owners and the self-employed. The loans are approved by banks but guaranteed by the SBA for up to 85 percent of the loan amount. These loans are good for established businesses wanting to expand. The SBA also offers disaster loans and microloans.

Other Loans

Other loans include those made by community-based organizations, lending networks, peer-to-peer lenders, and government loans for farmers, disaster relief, housing, education, veterans, and business.

The Options for Personal Loans from Direct Lenders for Bad Credit

People with bad credit don’t have as many loan options, but that doesn’t mean they can’t find affordable personal loans for their needs. It might take a bit more shopping and comparing, but those are critical steps for any borrower.

The most important step is to determine whether the budget can support the loan payments. If the borrower’s debt-to-income ratio doesn’t support the number of loan payments, there are several options: borrow from a different lender, spread out the loan payments, or forget the loan.

There are thousands of lenders and loan options, so many people get surprised by the offers available to them. Those with really bad credit can often qualify by getting a cosigner or filing a joint application with a spouse, friend, or family member.

In joint applications, the credit score of the more qualified applicant can result in a better loan rate and easier approval. Joint applicants share the ownership of the loan, and each joint applicant shares full responsibility for repayment.

Consignors are on the hook only if the borrower doesn’t repay the loan. The cosigner doesn’t own any of the loans, and the borrower normally makes all the payments.

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