The world of lending is vast, and it can often be difficult to know where you stand. There are hundreds of lenders out there, each claiming that they have the lowest interest rates around, or the quickest payout times for your loan. Others still will talk about their high customer satisfaction ratings, or how they’ll work with the widest range of credit scores available. When you’re saying, “I need $5,000,” how do you know which of these lenders will be the best option for you?
This can be a very tall order. Not only do you normally have to sort through all of the sales ads and free consultations these lenders push, but you have to know what’s most important before you even speak to them. There are plenty of lenders out there who don’t have your best interests in mind and they are banking on you not being educated enough to spot a bad deal.
With this guide, we’ll discuss the most important aspects of the lending process that you need to prioritize for yourself and give you some tips that will educate you about how to get a $5,000 loan that leaves you thrilled with your lending choice.
Set Your Priorities First
Before you even start shopping for $5,000 loans, you need to identify what’s most important to you. No matter which lender you choose to work with, there’s always going to be a little bit of giving and taking. Enjoying one aspect will often mean that you’re sacrificing another.
Before you can prioritize what matters most to you in a loan, you need to be aware of several factors that you will need to weigh before you commit to a loan.
Interest Rates
The interest rate is the amount that is added to the amount you’re requesting (also known as the principle). It is how lenders make money for themselves and stay in business.
Before you shop for a loan, you need to decide for yourself how much you’re willing to pay to receive your 5,000 dollar loan. Interest rates can vary widely, even with a single lender. They can often range as low as five percent, all the way up to 25 percent, or even higher. Often, the best interest rates are reserved for people with excellent credit scores. If you’re seeking a $5,000 personal loan with bad credit then you should expect that you may have to pay a higher interest rate.
Loan Limits
The loan limit is just what it says – the maximum amount that a lender is willing to offer you. If you already know that $5,000 is definitely all you need, then so long as the lender is willing to go up to $5,000, then this won’t be a problem. But if they’re not willing to, or if you ever decide to seek a loan for an amount like $25,000, then this will become more of an issue.
The Payout Time
If you’re in a situation where you’re saying, “I need $5,000 now,” then this will be one of the most important factors for you as you shop. Many lenders will work with a wide range of credit scores and offer some good interest rates even with low scores. The trade-off, though, is that these lenders are often slow to get you your money.
Every lender works almost exactly the same way – you apply for a loan, a hard inquiry is made against your credit score, an offer is made, your loan is underwritten, and then you receive your money. What varies most is the time this takes.
Some lenders can have your money to you by the following business day; others can take up to a month to process. If you’re desperate to get the money right now, then you definitely want to establish this up front.
The Loan’s Life Cycle
This defines how long you have to pay back your loan, along with the interest. In general, the smaller the amount, the less time you’re given to pay it back. Conversely, larger loans tend to be extended over longer periods of time, but also carry higher monthly payments.
For example: if you take out a personal loan under $5,000, you might have two to three years to pay it back.
This isn’t universal though. Some lenders will be willing to offer you a loan of $5,000 but expect you to pay it back in a year. That comes to roughly $417 a month. You’ll need to determine how much you can realistically pay each month, and establish this at the beginning of your search.
Matching Your Priorities with Lenders
As I said before – the lending world is full of back and forth. You may be able to get the money you need now, but that might mean having to pay it back quickly. Or, you’ll be able to extend your loan out over several years but have to pay a higher interest rate. The only sure way to know that you’re getting the best deal possible is to compare different lenders.
This can be a big pain and can take weeks if not months. It’s not as simple as contacting a lender and saying, “I need a $5,000 loan.” As I mentioned when I discussed the payout time, a hard inquiry is usually made against your score. Some lenders won’t even talk to you until they’ve assessed your score. Each time a hard inquiry is made, your score drops. If you have bad credit, this will only make your situation worse.
That’s the bad news. The good news is that the aspects that you need to prioritize won’t change, whether you’re trying to find a loan for $4,000 or any other amount. As long as you understand them, and can them prioritize well, you’ll become very skilled in navigating the different lending options available. What’s even better is that Loans Now has a process to allow you to compare multiple lenders all at once, saving you time and frustration in finding a great personal loan.
By giving us some basic information, including where you live, and the amount you’re looking for, we can compile offers from several different lenders all at once. We also don’t make hard inquiries against your score – you check it, free of charge, and tell us what it is. After we’ve compiled your options, we’ll offer you some guidance about which offers we think will work best for you.
Reach out to Loans Now today, and let us help you find the perfect lender for your $5,000 loan!