What You Should Know about a Personal Home Improvement Loan
Personal loan is an installment loan that allows you to borrow a lump sum amount. The usual length of the repayment term runs from 3 – 7 years. Using the loan calculator, you can estimate how much monthly payment you are to pay with different length of repayment terms. Long repayment term has low monthly amount but keep in mind you are also paying more interest when you take longer to repay the installment loan. Short repayment term has high monthly payment but you also pay lesser interest and get to settle the loan faster.
Personal loan only allows you to borrow up to $40,000 to fund small home improvement projects. It is not necessarily that the amount you want to borrow will get approved. The lender will assess different areas of your finance before sending you a final decision that inform you how much you can borrow. You must meet criteria such as minimum annual income, stable employment, decent credit score and debt to income ratio when you apply for the loan. Ideally, you should not have taken out any new debt in the past 24 months.
If you want an inconvenient way to get the funding, you should apply for the personal loan with internet lenders including online personal loan lender and p2p lender. You don’t have to wait for so long if you apply for the loan online. Online lenders review applications faster and you can expect to hear an approval decision from them within 1 week. The funds will be direct deposited into your account within a few days from the approval date. Just like bank loan, your payment will be reported to the credit bureau so it is important to make payment on time.
Every time you apply for a loan, the lender will perform a hard inquiry and deduct some credit score points on your credit report. Hard inquiry will remain on your credit report for a maximum of 2 years. Therefore, you should try to apply one loan at a time. If you want to compare the available loan offers, you can use the loan preapproval feature. The preapproval feature lets you know at how much interest rate you would be approved for the loan.
The interest rate for a personal loan can range from 5% – 38%. Higher interest means you will pay longer to pay off the entire loan. Low interest rate makes the loan affordable so you can pay it off faster.
Having a good credit score on your credit report can help you to get approved for a loan with cheap interest rate. If you haven’t checked your credit score for a long time, you can request one free copy from the credit bureau and review the entries. Reporting an error entry can help to raise your credit score a bit and help you get a better interest rate.