Your Personal Loan
Questions Answered By UCCU Loan Experts
Understanding the ins and outs of a personal loan can help you decide if it is the right financing for you to cover planned and unplanned expenses — without breaking your budget!
Whether it’s cash for a special occasion, like a wedding or family vacation, funds for tuition, money for home improvements, or consolidating debt — a personal loan can be used for almost any purpose. Read below to have some of your personal loan questions answered.
Can You Refinance a Personal Loan?
Yes. But, as with every financial decision, make sure it makes sense to do so — the goal is to save yourself money!
A few scenarios where it makes sense to refinance are to lower your current interest rate, consolidate multiple loans into a single loan, or if your financial situation has improved since when you took out the loan and you can save on interest.
A personal loan refinance can give you the ability to keep building on your success with good payment upkeep.
Can You Use a Personal Loan to Buy a Car?
Yes, and there are a couple of advantages to using a personal loan vs. a car loan. At UCCU, our personal loans don’t require a downpayment.
Unlike a car loan, a personal loan doesn’t require a lien on your car which eliminates the risk of repossession. You’ll want to make sure your credit is in the good to the excellent range to qualify for the best rate — we’ll cover that below!
What Is a Good Interest Rate?
Your personal loan interest rate will depend on your credit, income, debt, and other financial factors. The average interest rate for a personal loan can vary widely depending on not only these factors but the requirements of the lender.
If you have excellent credit, you’re in luck to get the lowest interest rate possible. Not in the excellent credit category? No worries! For good to fair credit, you could still qualify for a competitive rate.
Look at lenders’ credit score requirements; the higher your score is above their minimum, the better your chances of getting a lower rate.
At UCCU, we offer competitively low interest rates on personal loans. All personal loans come with flexible terms, no application fee, and no collateral to secure.
Will Getting a Pre-Approval Affect My Credit Score?
You’ll want to compare offers from multiple personal loan lenders before making a decision.
Most lenders will run a “soft” credit inquiry to show you pre-qualified offers. This allows you to compare each lender’s offerings without affecting your credit score.
Don’t forget that pre-approvals expire. They typically last less than 60 days, so only seek pre-approval when you know you’re ready to apply for a personal loan.
How Do I Qualify for a Personal Loan?
The higher your credit score, the more likely you are to receive the best interest rate. Average scores fall into the following categories:
800-850: Exceptional
740-799: Very good
670-739: Good
580-669: Fair or average
To qualify, you should expect to provide documentation like your most recent year-to-date pay stub, previous W-2s, personal tax returns, and/or a current personal financial statement.
What if I Don’t Qualify on My Own?
You could add a co-borrower who agrees to pay the loan if at any point you aren’t able to do so. Keep in mind that the credit history of you and your co-borrower is taken into account for approval.
At UCCU, we maximize the borrowing experience by not requiring collateral or charging application fees for you or your co-borrower.
How Long Does Approval for a Personal Loan Take?
Timing for approval is lender-specific but on average, it can take anywhere from one to seven days to be approved for a personal loan. You can reduce the chance of any delays in the process by making sure to provide accurate information when filling out the application form.
Can I Pay Off My Loan Early?
You can always pay off your loan early, but early repayment penalties to your personal loan are determined by your lender. Be sure to contact your lender for details.
Discover More Personal Loan Questions & Answers with UCCU!
We hope these personal loan questions helped you decide if it’s the best financing option for you. If you’re still on the fence about whether or not you should take out a personal loan, we invite you to learn more about personal lending options with UCCU.
Our loans are designed to meet your needs, with low rates and flexible terms. See your options below!
See Our Personal Loans