Best Finance Network
Get the best connectivity about finance.

A personal loan is money that is borrowed for your personal purpose which mainly includes debt consolidation, student loan, unexpected medical bill or even buying a new appliance. The money is returned by you with interest in monthly installments from time to time which usually lasts from two to five years. As has been seen, nowadays most of the personal loans are unsecured which means that they are not backed up by the collateral. APR is known as the annual percentage rate which determines the interest you pay on that loan. There is no fixed APR and may vary from scenario to scenario but it ranges from around 6% to 36% with an average of around 9.41%. APR depends upon your income, credit score, debt, and creditworthiness. If you were looking to apply for a personal loan and didn’t know how to apply for it then you have come to the right place. This article will guide you through how to apply for a personal loan.

How To Qualify For A Personal Loan

There are many things and steps that shall be kept in mind in order to qualify for a personal loan. For example, if a person wants to borrow a loan for remodeling his house or buying a new car, then the equity loan would surely come with a lower interest rate. These are not like unsecured personal loans as you are not solely judged on creditworthiness. On the other hand, these instant cash loans are secured by the home you want to remodel or the car you want to buy.

Decide How Much To Borrow

One should be definite enough to determine how much exact money that he needs to borrow. One should definitely keep in mind that you don’t need to just repay the original loan but you have to repay along with the interest. A sane person would not borrow extra money just so that he would pay interest on money that he would not need. This is the reason why you should decide on how much money to borrow. One should also make sure that he would be able to afford the payment with all the interest including. It has been seen that in many cases, people opt for way too high instant cash loans and are unable to pay back in the end which not might end up good.

Check Your Credit

It is of no surprise that instant cash loans heavily rely on creditworthiness. One should check their credit scores and should obtain the credit reports from each of the three major credit reporting agencies such as Equifax, TransUnion, and Experian. Referred to as soft inquiries, none of these actions will impact your credit score. It will only impact when you apply for a loan and lenders opts for a hard inquiry. There are many credit card and loan companies out there which provide free monthly credit score which is found beneficial for applying for an instant cash loan.

Interest rates continue to fall and have entered all-time low territory. So why is there is no jubilation and lines of people at the banks trying to buy homes or refinance existing loans?

Low Interest Rates Fail To Stimulate Housing

Despite the cheap money, it is still challenging for many homeowners who are underwater on their existing loans and who may have other credit blemishes due to job loss, job change or inconsistent income. Certainly, there are some people who are able to take advantage of the cheap money but not the massive numbers that we saw in boom years long past. Government stimulated initiatives continue to roll out which incentivize banks to refinance struggling homeowners into lower rate loans.

Retirees Suffer From Prolonged Low Interest Rates

There is a scary flip side to the interest rate environment. Pension funds which rely heavily on bonds and other interest rate based securities to generate sufficient invest returns to pay retirees are suddenly not making enough to cover their obligations. Compound that with retirees trying to living off their life savings which barely generates 1% return and you can begin to see the potential epidemic.

Perfect Storm Endangers Pension Funding

The longer we endure this type of interest rate environment, the wider the funding gap of pension plans. This will put pressure on stocks if companies are forced to close pension gaps with current earnings. When you also consider that 1) our massive Baby Boomer generation is retiring right now and 2) the longer life expectancies of Americans due to better health care, you can see how there are several layers creating a perfect storm of massive pension underfundings.

Good News, Bad News Economy

Most subjects dealing with the economy and finances have a pro and con. Just like when you buy and sell stocks, there is a winner and a loser. With economics, there are two sides to every coin. For example, low interest rates help homebuyers but hurt people living on fixed incomes. When interest rates rise, many investors will benefit, but people with adjustable rates on credit cards and other debt will have to pay more interest. Even if you do not understand all the details, as a consumer, it is wise to stay aware that good news in one sector means the potential for bad news elsewhere.