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SOURCE: J&M Enterprises
Website DrCredit.com is offering a quicker solution when it comes to personal loans with new service.
(PRWEB) November 30, 2012
Personal loans are lending arrangements in which banks and other types of financial institutions provide loans to individual consumers. Unlike some other types of loans, a personal loan is generally not granted for a specified purpose. The borrower is free to use the funds for any purpose desired.
As with any type of lending situation, the loan applicant must meet the criteria set by the lender. Failure to do so will mean that the loan application is rejected. Fortunately, the applicant can address whatever issues led to that rejection, correct them, and reapply for the loan.
What are the Basic Qualifications?
Lenders will look at several different factors before choosing to extend a personal loan to an applicant. One of the first aspects that comes under scrutiny is the ability of the applicant to repay the loan. This means that the lender will want to verify the information provided about each of the income streams that will provide the funds for repayment. This will include income from a job, alimony payments, dividends from stock options and even any type of court ordered settlement that is disbursed in regular monthly payments.
Many lenders will also look at the debt to income ratio before extending loans of this type. The general idea is to make sure that the applicant has a sufficient amount of income to continue managing his or her other expenses while also making timely payments on the loan. This particular aspect of the loan evaluation process is in the best interests of everyone concerned. The lender is able to minimize the risk associated with approving the loan while the applicant is not burdened with more debt than he or she can reasonably manage.
Along with verifying that the applicant has enough income to make the loan payments in a timely manner, most lenders will also take a good look at the credit rating. This type of rating is determined based on how well the applicant manages his or her current debt obligations. A higher credit rating indicates that the individual is very diligent in making payments on time while a lower rating indicates that the applicant has submitted payments late or possibly even defaulted on debts in the past.
It is important to note that having a few credit issues does not automatically exclude applicants from being approved for personal loans. Many lenders will consider the circumstances surrounding those late payments, including how far in the past they occurred. Still, the lower rating will usually result in offering the loan with a slightly higher interest rate. That higher rate helps to offset the risk that the lender is taking on in order to do business with the applicant.
Types of Personal Loans
Based on your credit history, income and other factors, the lender may offer a secured loan. A secured loan is one that requires some sort of security or collateral. The value of the asset that is pledged as collateral must be equal to the face value of the loan. In the event that the lender should default on the loan, the lender can claim the asset and then sell it to settle the remaining balance on the loan.
For applicants with higher credit ratings, longer loan terms may be an option. Sometimes called signature loans, this arrangement does not call for pledging any type of collateral. This is because the lender believes that the financial stability of the applicant indicates that the chance of default is very small.
Which Kind of Personal Loan is Best?
Choosing the right type of personal loans involves being honest about your circumstances and comparing offers from different lenders. Make it a point to always work with a lender who has a reputation for honesty, integrity and working with clients to resolve any minor issues that may arise. When and as possible, negotiate the best possible interest rates and other terms. You also want to make sure that the amount of the monthly installment payments can be incorporated into the household budget without a lot of trouble.
Your job is to repay the loan according to the terms and conditions found in the loan contract. Doing so will help establish a positive relationship with the online lenders. That relationship can come in handy in the years to come, when you may need another loan to take care of events like replacing an air conditioning unit, making repairs to the home, or even funding a portion of a child’s education.
DrCredit is now also offering bad credit loans to consumers who are in need of them.
To learn more or to apply for a personal loan, go to http://www.drcredit.com
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