Although many people borrow money for big purchases such as homes and cars, there may be times when you need cash for other reasons. Most banks and credit unions also provide personal lending services. You might be able to take out a loan to pay off high-interest credit card debt, pay tuition expenses, or make a large purchase, such as your wedding. Consult the frequently asked questions and answers below to learn more.

A Guide to Personal Loans 

How can I qualify for a personal loan?

Personal loans usually require a good credit score (around 700 or higher) and a steady income. Generally, if you have an established history of paying your debts, and can show that you have the capacity to repay what you borrow, then you have a good chance of being approved.

Can I get a loan with poor credit? 

Some credit unions or banks will lend to people with less than perfect credit. However, if your score is lower than 620, or if you have a history of delinquencies, collection accounts, or bankruptcies, it’s going to be more difficult to qualify.

If you can borrow money, it’s likely to be at a very high-interest rate and a shorter repayment period. If you have poor credit, you might qualify for a secured loan, which requires collateral that can be seized if you don’t pay. 

How can I benefit from a personal loan?

Borrowing money can be a good way to gain control of your finances. For example, you might be able to consolidate high-interest credit card debt into one smaller payment, saving money over time.

If you want to make a large purchase, it allows you to make payments over time, so it’s more manageable. Handling the account responsibly can also help establish a positive credit history, increasing your access to more credit in the future. 

How does personal borrowing differ from other types? 

Unlike other loans that are for defined purposes (like a home), personal borrowing doesn’t have such restrictions. However, that is not the only difference. You can typically expect a higher interest rate and shorter repayment period, but the application process is simpler and you typically get your money very quickly. 

For a banking partner that will help you reach your financial goals, turn to Alliance Credit Union in Fenton, MO. This local credit union has welcomed members since 1948 and offers convenient loans, as well as other services, including checking and savings accounts. Whether you’re buying a home, want to start a business, or pay off your credit cards, their staff will help you find the right solution. Call (636) 343-7005 to learn more about enrollment or visit their website to explore their services.