What disqualifies you from getting a personal loan?

A personal loan generally it’s not hard to get, but some personal loans are much more difficult to get than others. Unsecured personal loans often require a credit score of 660+, and some are only available to people with scores of 700+.

Some unsecured personal loans are available to people with lower credit scores, but you have to watch out for predatory interest rates. For example, one good unsecured personal loan provider for bad credit is Avant, whose interest rates will only be as high as 35.99%. In contrast, a company like Opploans could charge as much as 199%.… read full answer

A secured personal loan is a lot easier to get than an unsecured personal loan, as the collateral that you provide greatly reduces the lender’s risk. Even people with bad credit should have little trouble getting approved. The tradeoff is that the lender can take ownership of the collateral if you are unable to pay back your loan. So there’s a lot more risk for you as the borrower. You’ll have to decide if you have any collateral you’re willing to put on the line, such as an auto title, stocks, money in a certificate of deposit, or valuable art.

One thing that will make it extremely hard to get a personal loan is if you don’t have any kind of income. You need income to show that you’re capable of making monthly payments. You don’t necessarily have to be employed, however. Your income can come from other sources like a retirement account, alimony, disability payments and more.

You can use a personal loan for just about anything, from credit card debt consolidation and home improvements to large purchases, car repairs and medical procedures. As long as you don’t take out a loan whose terms specify what the funds must be used for, you’re free to do what you want with the money. For example, LightStream has different APR ranges specifically for different loan purposes, but most lenders do not.… read full answer

The only things you’re really not allowed to spend the money on are school tuition (you need a student loan instead), gambling and illegal purposes.

Things you can use a personal loan for:

Debt consolidation

You can use a personal loan to pay off existing debts, putting everything together with one easy monthly payment. This is a good option if you can get a lower APR on the personal loan than the APRs on your existing debts.

Medical/dental bills

Medical bills are an unavoidable expense, and a personal loan can help you finance them over time instead of being overwhelmed immediately after treatment. You can also refinance expensive bills that are already taking a toll on your wallet.

Home improvement

Home improvement expenses are often a good thing to use a personal loan for because they can increase the value of your property.

Starting a business

Starting a business can cost thousands of dollars, even if it’s a small sole proprietorship. And it’s perfectly legal to use a personal loan for business. But doing so can be a gamble, considering 50% of small businesses fail in the first five years.

Emergency expenses

Some lenders, like LightStream, offer the possibility (but not the guarantee) of same-day funding. Most personal loans will be able to provide financing in 7 business days or fewer, though some may take up to a few weeks.

Car repairs

A broken car can make your life incredibly difficult. Taking out a personal loan to pay off the repairs can ensure you get back to normalcy sooner. The average American household spends over $800 per year on car repairs, according to Liberty Mutual. Personal loans are usually for $1,000 or more.

Weddings

It’s good to have a memorable wedding. But it’s not the best idea to use a personal loan for one, even though it’s allowed. You probably don’t want to start married life with heaps of debt.

Funerals

A funeral could cost over $10,000. If you can’t pay for the funeral out of the deceased’s estate or your own savings, you might consider a personal loan.

Vacations

Vacations are fun, but they are a luxury. It’s best to pay for them using money you already have saved, but you can use a personal loan if you want to.

Veterinary bills

If you’re unable to pay for your pet’s medical bills all at once, a personal loan can help you spread out that expense.

Big purchases

You can buy pretty much anything with a personal loan, as long as it’s not illegal. But the best purchases to make are ones that are essential or a good investment, especially those too large to put on a credit card.

Those are just some of the expenses for which you can use a personal loan. However, just because you can use a personal loan for almost anything doesn’t mean you necessarily should. Personal loans charge interest and fees, so it’s best to only take out a loan for expenses that are necessary or will profit you in the long run.

A medical bill is an example of something that might be necessary, and remodeling a kitchen is an example of something that could make you money by increasing the value of a home. On the other hand, while you might be tempted to take out a loan for your dream wedding or vacation, it’s better to save first and only spend money you already have.

Finally, it’s worth noting that you won’t be able to use a personal loan for anything if you can’t get approved for one. Personal loans tend to require a credit score of at least 660, though some accept lower scores. You can see your personal loan approval odds with various lenders by using WalletHub’s free pre-qualification tool.