A personal loan is a loan that a lender gives a borrower to use however the borrower wants.
Most of the time, there is no specific use for these.
With some other kinds of loans, the lender might put limits on what the money can be used for. This is often the case with home loans, loans for home improvements, and other similar loans.
Personal loans can be anywhere from a few thousand dollars to several thousand dollars. Personal loans are often given based on many factors, such as:
- The borrower’s past loan history and credit history
- How much risk there is for the lender
- Local and state personal loan laws
How Does Identity Theft Figure in with Such a Loan?
Even though anyone can be the victim of identity theft, identity thieves usually go after children and older people.
Children are often the ones whose identities are stolen. This is because they are better choices for people pretending to be someone else.
For example, most children don’t have a credit card, driver’s license, tax record history, or anything else that can be used to track them down. So, thieves can use children’s information to open credit lines or get a loan.
What Are Personal Loans Used For?
As was said, personal loans can be used for many different things, depending on the needs of the borrower. Most people who get personal loans do so for things like:
- Certain business-related expenses
- Personal projects (building projects, hobbies, etc.)
- Home-related expenses (repairs, additions, etc.)
- Bad debt lawsuits
- “Catching up” on debt
- Personal expenses
- Purchasing a car (for instance, if they cannot obtain a car loan)
Personal loans can usually be used for anything, as long as the loan contract doesn’t say otherwise.
Does Personal Loan Require Collateral?
Most personal loans don’t need collateral, so they don’t have to be backed by something of value. However, some lenders require a personal loan contract to be backed by something of value.
Cash in a savings account, a car, or even a house can be used as collateral for a secured personal loan.
What If I Have a Legal Dispute over a Personal Loan?
Personal loans can sometimes lead to fights and legal problems. These can include things like:
- Misrepresentation of terms
- Breach of contract
- Fraud (either by the lender, the borrower, or both acting in concert)
When there are legal problems, a lawsuit may be needed to sort out the details. Remedies usually include monetary damages, changes to the contract, and, in some cases, criminal penalties.
What Does “Low Credit Score” Mean?
Scores ranging from 300-629 are typically considered low credit scores, but each lender may use a different range. FICO, a company that makes credit scores that is used by many lenders, says that you have bad credit if your score is 580 or less.
FICO splits your credit information into five categories, and each area impacts your score in different ways.
Here are the 5 FICO classifications and the percentages each adds to your score.
- 10% new credit
- 10% credit mix
- 15% credit history duration
- 30% sum of what’s owed
- 35% history of payments
The most important part is your history of payments, which shows creditors how often you have paid on time to others. If you don’t make payments on loans or credit cards, your score could go down. This could cause lenders to raise your APR and turn down your application.
What Are Loans for People with Bad Credit?
Even if you have bad credit, you can still get a personal loan if you qualify.
If a person’s credit needs to improve, the lender might turn them down for many other loans, even mortgages. But other companies are all about giving loans to individuals who might have trouble getting cash in other ways.
Some of these types of loans could have elevated interest rates or harsh penalties for missed payments.
Select a bad credit personal loan if you have a weak credit history or a low credit score. These lenders may take borrowers with fair or great credit scores (690 or above), but they also have flexible underwriting that lets them take borrowers with lower scores.
Personal loans with bad credit have fixed rates and fixed monthly payments, just like any other personal loan. Between $1,000 and $50,000 can be borrowed. Most of the time, these loans are not backed by any type of property.
Even if you have bad credit, it might still be possible to get a personal loan, but the rate will likely be high, and you might get less money than you wanted.
Is it Possible to Obtain a Personal Loan with Bad Credit?
It is possible to obtain a personal loan with bad credit, even though it will be more difficult than it would be if your credit score were high.
A person with a bad credit score could get a personal loan from the following places:
- Banks: Banks typically consider your credit score, credit history, and income while making lending decisions. The qualification conditions from large banks are less tolerant. Nevertheless, having a good connection with a local banking institution may aid you in qualifying.
- On the internet: Some lenders make efforts to offer personal loans to those with less-than-stellar credit.
Even though your income and credit are still significant considerations in a loan determination, some lenders may evaluate other aspects when deciding your eligibility.
You could bring a pre-qualified offer to your credit union or bank and see if they can do better, even if they don’t do pre-qualification.
Concerns About the Law When it Comes to Personal Loans for Those with Less-than-Stellar Credit
An important legal problem with personal loans for individuals with bad credit is loan fraud.
For example, a lender could lie about the loan terms, which could cause the borrower to lose money or even break the law. In the same way, a person applying for a personal loan could use incorrect information in their applications to look like they qualify.
As mentioned, identity theft involves something else. Some scammers could make up fake websites or companies that offer personal loans to people with bad credit. But their main goal is likely to use apps to get someone’s personal info. The scammer would then use that info to get into that person’s account.
Do I Need a Lawyer for Help with a Personal Loan Claim?
Personal loans can come in different amounts, interest rates, and payment plans.
If you need help with any personal loan problem, hiring a qualified credit lawyer might be best.
Your attorney can help you negotiate a loan’s terms and develop a good agreement. Also, if you have a legal dispute of any kind, your attorney can help you file a legal claim and stand in court for you.
Looking for a credit lawyer? You’ve come to the right place.
LegalMatch is an online attorney-client marketing service with over 5 million clients served. Our goal is to match you with the right lawyer for all of your legal needs.
The knowledgeable credit lawyers on LegalMatch can help you sort out your personal loan issues. Use LegalMatch to find an experienced credit lawyer in your area today.