In recent years, a growing number of borrowers have turned to personal loans to consolidate debt or help fund a major purchase. Fortunately, if you want to apply for a personal loan, it’s typically less of a hassle than qualifying for other types of loans.
We get it — you want to apply for a personal loan, but you don’t want to receive the dreaded personal loan denial.
Unsecured loans can be used for nearly any purpose. These financial tools allow you to consolidate debt or even fund a vacation. But it’s important to understand the basics of unsecured loans, and the pros and cons, before you borrow.
Payday loans and car-title loans aren’t just potentially hazardous to your financial health. They also might harm your physical health.
If you’re looking to borrow money, you’ll find that loans fall into two categories: secured and unsecured loans. And understanding the differences between these two types of loans can help you determine which is best for your situation.
However, some consumers might find that the new offering from Upgrade Inc. comes with a steep interest rate – as high as 35.89%.
In a news release, Upgrade says its new “personal line of credit” features the low cost, fixed rate and fixed monthly payment of a personal loan with the flexibility of credit lines available through a credit card.
With Upgrade’s new product, a consumer can seek a credit line up to $35,000 and can ask to tap into that credit line as needed. For instance, you might be approved for a total credit line of $10,000 but “withdraw” money only in $2,500 increments. For each “withdrawal,” known as an advance, there’s a fixed annual percentage rate (APR) along with a fixed repayment period (12, 24, 36, 48 or 60 months) and set payments (such as $225 a month).
Unlike a credit card, an advance from an Upgrade personal line of credit has a specific payoff date and doesn’t have variable APRs. Every time you tap into that line of credit, you’ll get a set APR and payoff period, and you’ll be able to pick a repayment period.
No fees are charged to set up or use an Upgrade line of credit. And the APR applies only to the amount you actually borrow (such as $2,500) and not the entire line of credit (such as $10,000).
Upgrade says its personal line of credit differs from two similar products – a home equity loan and a home equity line of credit (HELOC) – in three ways:
Upgrade’s personal credit line might not be for everyone, though.
For one thing, Upgrade loans aren’t available to residents of Connecticut, Colorado, Iowa, Maryland, Massachusetts, Vermont and West Virginia.
More importantly, the APR for an Upgrade personal credit line might be a lot higher than the APR for a credit card.
Upgrade says its credit lines offer APRs of 6.94% to 35.97% on amounts ranging from $500 to $35,000. An APR of 6.94% is way below any credit card APR you’d find, but an APR of 35.97% is way above any credit card APR you’d find.
In other words, a line of credit with an APR of 6.94% would be a deal, while a line of credit with an APR of 35.97% would be a steal (as in money is being stolen from you).
Upgrade points out that a shorter repayment period can result in a lower APR, meaning you’d be paying less to borrow the money. But if you’re shooting for a lower monthly payment, you might want to go with a longer repayment period. However, keep in mind that if select a longer payment period, you’ll be paying more interest over time.
Of course, Upgrade doesn’t extend loans to everyone who applies. Just as with credit cards and other types of loans, you’ll qualify based on your credit score, credit history and other factors.
Upgrade is a product worth looking at, but be sure to look hard at what APR you’re being offered. Otherwise, you could pile up more debt than you already had.
Many of us don’t have piles of extra cash sitting around. In fact, surveys show that more than half of Americans have less than $1,000 in their piggy banks.
If you dream of vacationing on an exotic island – or have visions of a glorious kitchen remodel – you might be tempted to take out a personal loan to turn those fantasies into reality.
You certainly aren’t alone if you’re rushing to file your tax return and looking for some last-minute tax savings strategies.