How to Get a Personal Loan (Application, Approval, Alternatives)

  • Personal Loans

Personal loans are typically unsecured loans offering up to $50,000 with a term of up to 5 years. They come in several shapes and sizes and interest rates, fees, and terms can differ greatly, but the average personal loan in the United States is between $7,000 and $8,000 and charged at a rate of 11% and 12%.

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Steps to Getting a Personal Loan

  1. Check Your Credit Report
  2. Compare Rates and Terms
  3. Get a Pre-Qualification
  4. Look at the Fine Print
  5. Look at Alternative Options
  6. Receive Final Approval

1. Check Your Credit Report

The better your credit score is, the lower the interest rate of the loan will be. You can get a free credit check from all three of the main credit bureaus (TransUnion, Experian, Equifax) once a year and use this to see what the lenders will see.

Your credit report will show your credit history in intricate detail, as well as your personal details and all active accounts. If your credit score is below 600, you’ll likely be refused a personal loan; if it’s lower than 700, you may succeed, but won’t necessarily get the best rate.

In any case, it always helps to build your credit score and it’s also very easy to do. If you follow the steps below, you may see a sizeable improvement in a few short months:

  • Increase Credit Limits: Your credit utilization ratio calculates your debt in relation to your credit limits. Someone with a debt of $100,000 is not necessarily worse off than someone with debt of $10,000 if the former has a credit limit of $2 million and the latter has a credit limit of $20,000. By judging debt in this way, your credit score builds an accurate and relative picture of your financial situation. By increasing your credit limits, you can improve this part of your credit score in one quick move.
  • Payoff Debt: Debt is the other half of the credit utilization ratio and works just as well as increasing your credit limit. If you have a debt of $5,000 and a credit limit of $10,000, your credit utilization is a high 50%. If you repay just $1,000 and increase your credit limit by $1,000, this ratio drops to a respectable 36%.
  • Get a Secured Credit Card: A secured credit card uses a security deposit as collateral, allowing you to sign-up even if you have very bad credit or no credit at all. It can build your credit in as little as 6 months as all payments are reported to the credit bureaus. Your deposit will set your credit limit and is completely refundable.
  • Stop Applying: Every time you apply for a new auto loan, personal loan, credit card or mortgage, you receive a hard credit inquiry, which can reduce your FICO credit score by between 2 and 5 points. What’s more, every new account will reduce your score even more and make it harder to quickly build a strong score. Keep applications to a minimum and only apply when you absolutely need a new account.
  • Keep Making Payments: Your payment history accounts for 35% of your FICO credit score, which is more than anything else. It takes a long time to build your score this way, but as soon as you miss a payment, your score can drop by over 100 points and undo all your hard work, while making your task considerably harder.

At the same time, however, your credit score is not the only thing that matters. There is a misconception here, one that claims you can get pretty much anything you want as long as you have an excellent credit card. But that’s simply not the case.

If you are self-employed with an inconsistent income that never goes higher than $15,000 a year, it’s still possible to have an excellent credit score. After all, as long as you keep credit applications to a minimum, meet your payment obligations on time and keep a strong credit utilization ratio, you can build a great credit score.

But does that mean you’ll be offered a $200,000 mortgage or a $50,000 personal loan? Of course not. You’re not making enough money to cover those debts. You might be offered a low limit credit card with relative ease, but you’ll struggle to get a sizeable personal loan and may be refused outright.

2. Compare Rates and Terms

An estimated rate is, as the name suggests, just an estimate. It can vary greatly depending on your credit score, income, and a few other factors. However, your eventual rate will always fall into the estimated range and by looking for the best ranges and comparing the most likely rate based on your current credit score, you can avoid wasting your time on high interest loans.

Many borrowers will look for the lender they are most familiar with, including the ones they have a bank account or mortgage with. But your checking account is irrelevant here and by skipping the comparison shopping you could end up with a much higher rate than you can afford.

Look for the cheapest rates and compare these to the best loan amounts. Calculate how much you will need and whether or not you can sacrifice a few dollars here and there to save more on interest. 

3. Get a Pre-Qualification

A pre-qualification will give you an idea of what sort of loan you can get based on your credit score and income. You can then use this information to compare and contrast, ensuring you find the best and most suitable loan for you.

You will need to supply all of the following information, and this will be used to determine if you’re a good fit or not:

  • Your Social Security Number
  • Your full income and debts (debt-to-income ratio)
  • Your date of birth, home address, phone number, and email
  • All your previous addresses dating back a fixed number of years
  • Details of your education

If your income is too low, your debt-to-income ratio is too high, your credit score is poor or you have made too many credit applications, you may be refused a pre-qualification.

4. Look at the Fine Print

Does the loan have a prepayment penalty? Does it charge high fees and penalty rates? Is there an origination fee? This information may not be included on the main offer page, but it’s essential for determining the worth of a loan, so dig around in the terms and conditions, and make sure you’re getting the best loan possible in terms of the lowest rate as well as the lowest fees.

5. Look at Alternative Options

A personal loan is not the only option at your disposal, and it may not even be the best one. Depending on what you need the money for, there are a host of better alternatives out there, ones that may be more forgiving of your credit score and more willing to give you a large sum and a low rate.

It’s not all about banks. There are online lenders, credit unions, and a host of other financial institutions willing to help you out.

We have outlined some of the best alternative options a little further down this article.

6. Receive Final Approval

Once you have browsed multiple loan offers, checked loan rates, and decided on the best option for you, it’s time to apply and get final approval. You will need to provide some additional info, including W-2 forms and pay stubs, and then the lender will check your credit score and you’ll receive a hit of between 2 and 5 points.

If there are no issues, the loan will be finalized. Some online lenders offer to pay your funds by the next business day and other lenders offer instant payment on acceptance of the loan application. However, many will pay within 1 week.

What are Personal Loans Used For?

You can use a personal loan for a variety of reasons and in most cases, the lender doesn’t care which one you choose. As long as you meet the monthly payments and have a respectable credit score, they don’t care if you’re blowing it on a vacation or launching a business. Here are a few reasons to apply for a personal loan, some of which make more sense than others.

Debt Consolidation

If you have a lot of credit card debt, you can use an unsecured personal loan to clear it. You’ll still have debt, as you’re essentially swapping one debt for another, but you may be charged a lower interest rate or smaller monthly payment.

There are debt consolidation and debt management companies that specialize in this service and can do all the hard work for you. However, these companies focus mainly on reducing your monthly payment and interest rate in exchange for a prolonged-term. You’ll pay less per month and may have an APR that is several points lower, but the increased term means you will pay much more over the length of the loan.

If you have a strong credit score, are in a good financial position and have several high interest credit card debts, you can get a low rate, short-term loan. You’ll pay more per month, but over the term, you could save thousands of dollars in interest payments.

Vacation

It’s rarely a good idea to accumulate debt just so you can enjoy the vacation of a lifetime. But what if it’s the only chance you have of taking that vacation? What if it would be a life goal realized and you’re confident that you can make the monthly payments and eventually clear the debt?

In such cases, while we would never recommend it, using a personal loan for a vacation is understandable. It’s something that many older married couples do to pay for cruises and trips across Europe. It’s also a method used by young married couples to have the honeymoon they have always dreamed of.

College Education

Student loans aren’t always readily available, nor are they the best option. And while they are usually more preferable to personal loans, they may not provide the coverage that you or your grandchildren need.

In the last decade or so, there has been an over 1,000% increase in the number of senior student loan borrowers. This isn’t the result of an influx of mature learners, but rather it’s because they are assuming debts on behalf of their grandchildren and children, co-signing to help them through college.

Pay for a Major Expense

Life can throw several major and unexpected expenses your way, and if you don’t have any money in your savings, a personal loan may be your only option. Many couples live their lives relatively debt and problem-free until one of the following expenses raises its head and they opt for a personal loan.

  • Marriage: A marriage is not something that happens unexpectedly, unless you’re a parent and your child is the one getting married. In either case, it’s a massive expense that can cripple you financially, with the average wedding costing over $30,000.
  • Adoption: The average cost of adoption in the United States ranges from between $40,000 and $50,000. Like a wedding, it’s not necessarily something that happens unexpectedly, but also like a wedding, when the time is right and the need is there, it’s something you feel like you have to do.
  • Funeral: Funerals can cost upwards of $10,000 and often occur out of the blue. If the deceased is insured or has assets, it’s not a problem, but there are countless people who are not insured, don’t have assets, and die unexpectedly. If you’re the closest person to them, you may find yourself assuming responsibility for their funeral.
  • Medical Services: If you fall ill and need a specific type of treatment or surgery that your insurance won’t cover, a personal loan could be the only option. Medical treatments are very expensive, and many Americans simply can’t afford to cover these costs out of their own pockets.

Launch a Business

Launching a business is another risky way to use a personal loan, but one that many borrowers are submitting to every year. This is the golden age of entrepreneurs, and there has never been a better time to launch a business.

Of course, grants and business loans are also available, but the former often requires you to work in specific niches and abide by specific terms, while the latter will be weighed against your personal finances if your business is small or new. A personal loan, therefore, may be the only option for business owners seeking to launch a new project.

Alternative Options to Personal Loans

A personal loan isn’t your only option when you need a little cash. You can borrow money through several different avenues, and the best option for you will depend on what you’re using the money for:

Credit Building

You need credit to build credit; you need a credit card or a loan before you can get the FICO score you need to get a credit card or a loan. It can feel like a Catch-22 situation, but it’s not as complicated as it might initially appear.

If you have no credit or bad credit, you may be offered a super high interest rate loan or credit card and that can help you to build a respectable score. However, it’s a risky way to do it and there are many better options out there if your only goal is to build credit.

For loans, you can use something known as a credit builder loan. Much like a reverse loan, a credit builder loan requires you to complete many of the same steps as a traditional loan, only the lender keeps the lump sum amount and moves it to a secured account. 

That loan payment earns you a small rate of interest and this helps to offset some of the interest you pay the lender. Every month, you make a payment on the loan, paying some of the principal in addition to the monthly interest, and the lender will report your payments to the three major credit bureaus (TransUnion, Experian, Equifax).

Every month, your score will improve slightly as your payment history receives a boost and then, at the end of the term, they’ll release the lump sum to you, and you’ll get most of your money back (minus the interest) in addition to the credit score boost.

Paying Off Debt

A personal loan is a great way to clear debt, but it’s not necessarily the best option. If you’re struggling to meet your monthly payment obligations, it’s not the right option at all, as your monthly payments will increase as your term decreases.

Instead, you can look into the following options:

  • Debt Payoff: Sometimes, simple debt payoff strategies like the Debt Avalanche and the Debt Snowball are enough to clear your debt and can do so in a way that won’t cost you dearly or damage your credit score.
  • Debt Settlement: One of the best and cheapest ways to clear credit card debts, debt settlement works by agreeing reduced settlement amounts with your creditors.
  • Debt Management: A form of debt consolidation performed by a specialist credit counselor. You will pay less every month and can receive greatly improved terms.

Launching a Business

Once you’ve cut costs, reduced expenses, and considered all possible ways to reduce your initial outlay for a business launch, then it might be time to consider crowdfunding. Sites like Kickstarter can help you to get the funds you need and if you have a good idea or product, along with perks, it can give you capital.

You can also sell shares in your business to friends and family, or simply ask them for a small loan.

Expanding a Business

One of the best loan options for expanding your business is something known as PayPal Working Capital, a program that we have touched upon and praised several times before. If you accept PayPal for your business and have processed many payments through your PayPal account, you’ll be offered a lump sum to help you grow.

The loan amount you’re offered will depend on how much money you receive every month. As for the repayment term, you need to pay 10% of the total every 90 days, and all payments are taken as a percentage of your income. If you opt for $20,000, you may pay a fee of $2,000, taking the total to $22,000, and be asked to pay $2,200 every 90 days for a 20% cut.

This means that for every $1,000 you earn, you’ll pay $200 back to your PayPal Working Capital loan, in addition to the usual PayPal fees. The application process is quick and easy, and you can have the money in your PayPal account in just a few minutes.

Paying for Education

While a personal loan can be a useful option when paying for your education or a family member’s education, student loans often provide better rates and loan terms. They can also cover most of the costs associated with college, although if you need extra money for living costs, then a personal loan can be considered.

Paying for Vacations or Other Expenses

If you are a homeowner and have built substantial equity in your home, then a home equity loan or home equity line of credit may provide you with better loan terms and a much higher loan amount. 

A home equity loan or line of credit is a secured loan, as it uses your home as collateral. If you fail to make the payments every month and eventually default on your loan, the lender can simply take your asset and use it to recover the costs of the loan. 

As a result, the annual percentage rate is often much lower. You will still need good credit and a respectable debt-to-income ratio to apply, but the best home equity loan is typically much more favorable and cheaper than the best personal loan.

Source: pocketyourdollars.com

Questions to Ask When Shopping for Health Insurance

  • Health Insurance

Whether you are acquiring it through your employer or on your own, shopping for health insurance coverage is a task that many adults will be faced with at some point. Health coverage is not a one-size-fits all amenity, and it comes in many forms such as Point of Service (POS), Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and more. 

Find the Right Health Insurance for You!

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Compare free personalized quotes from the nation’s top providers.

Buying health insurance is a big commitment, so do the research and look over all your options before making any hasty decisions. Technical information about different health insurance policies can be overwhelming, which is why seeking the help of a licensed insurance agent or a health insurance broker might be your best bet. In the following sections we will discuss ways you can prepare to meet with a health insurance agent as well as what questions to ask. 

How to prepare to meet with a health insurance agent 

Health insurance exists to protect us financially when we get sick or injured, which is why it’s so important for you to look at plans that fit the unique needs of you and your family. Whether you are an employer shopping for insurance plans for your employees, or just an individual browsing your options, choosing a caring agent who takes their job seriously is key to finding the right plan. To start, you will want to work with an insurance agent who is experienced, knowledgeable and trustworthy.

Finding the right agent to work with isn’t the only important piece of the puzzle, you’ll also want to do your part as well. Coming prepared to the appointment will help things run more smoothly and will ensure that you to ask the right questions. 

Before meeting with the insurance agent, make sure that you:

  • Know how much you are willing to pay: Before your appointment with an insurance agency, you should consider how much risk you want to assume for yourself versus how much risk you want the insurance company to assume for you. In other words, would you rather make higher monthly insurance payments and have a lower deductible or would you rather pay a lower monthly insurance payment and have a higher deductible? If you’re okay with paying a hefty deductible during a medical crisis, then you might consider choosing a plan with a lower monthly payment. On the other hand, someone who needs more consistent medical care might opt for a plan with a lower deductible. 
  • Research the insurance agency that you will be doing business with: Ask friends and loved ones for feedback on the agencies they’ve worked with and find out how their experience was. If you are an employer, do some research to see what agencies other companies do business with. The important thing is that you choose an agency that you trust. 
  • Know what to bring with you: In order for the agent to help you the best they can, they will need to know as much information as possible about yours and your family’s medical history. The agent will want to know about any of yours or your family’s medical conditions and personal habits such as drinking, smoking, diet, etc. Call in advance and find out exactly what you need to bring. Be truthful and thorough so that your agent can find the best health insurance policy for you. 
  • Make a list of the questions that you will want to ask: It’s easy to get overwhelmed during these appointments. Writing down your questions will not only help you to be more organized, but it will also lower your chances of forgetting to bring up important topics.  

Questions to ask your health insurance agents

Before meeting with a licensed insurance agent, you should write down a list of questions that you want to have answered during your appointment. Here are some questions you should be asking your agent about your insurance before buying:

    • How much will it cost? This is probably the most dreaded part of the conversation, but it has to be discussed! The overall cost of your health insurance policy will depend on your premium, deductible and out-of-pocket-max. When browsing through plans, you’ll want to take notes on how much these three items will cost up front, because each plan varies in rates.
      • Premium: Health insurance premiums are rates that you will pay every month in order to secure your coverage. The initial payment you receive will be a premium, and will continue monthly. 
      • Deductible: If your plan has a deductible of $2,000, then that means you will be responsible for paying the first $2,000 of health care before your plan begins covering certain costs. Once you pay your deductible, you’ll pay significantly less for your health care. 
  • Out-of-pocket max: This is basically the maximum amount of money that you will ever have to be responsible for paying while covered—as long as you stay in-network, that is. Let’s say your out-of-pocket max is $5,000, but you end up needing surgery that costs $30,000. You would only have to worry about paying $5,000. Additionally, if you’ve already reached your $2,000 deductible, then you would only have to pay $3,000. The purpose of an out-of-pocket max is to protect you from having to pay extremely expensive bills, but remember—the surgery would need to happen at a medical facility that is in-network.  
  • Is my current doctor covered? If you’re already receiving health care, you’ll want to know if your current doctor is a part of any prospective insurance company’s network of health providers. This information should be fairly simple to find out but could be an important factor in your decision. If you are currently taking any medications, you’ll also want to ask your agent to check the formulary to see if your prescriptions are covered.
  • Who do I contact when I have questions? It’s important to find out if your prospective health insurance company has a customer service team you can call or message when you need to inquire about bills, claims, copays or anything else insurance-related. Does the company have a separate phone number to call when you want help finding a health care provider? Is this customer service line automated or will you be speaking to an actual insurance representative? These questions are important to determine what kind of support is available long after you’ve signed a contract. 

What happens during an emergency? When going to see a doctor for a normal visit, you have time to plan and make sure that the doctor is in-network. However, during an emergency, we may not have the same luxury. It’s possible that in a case where you need dire medical attention, the closest health care provider may not be in-network. You should ask about your prospective company’s policy on emergencies and what the standard routine consists of.

Source: pocketyourdollars.com

The Average Salary of a Surgeon

The Average Salary of a Surgeon

Surgery is a prestigious field that requires a high degree of skill, dedication and hard work of its members. Not surprisingly, surgeons’ compensation reflects this fact, as the average salary of a surgeon was $255,110 in 2018. This figure can vary slightly depending on where you live and the type of institution at which you work. Moreover, the path to becoming a surgeon is long and involves a substantial amount of schooling, which might result in student loan debt.

Average Salary of a Surgeon: The Basics

According to the Bureau of Labor Statistics (BLS), the average salary of a surgeon was $255,110 per year in 2018. That comes out to an hourly wage of $122.65 per hour assuming a 40-hour work week – though the typical surgeon works longer hours than that. Even the lowest-paid 10% of surgeons earn $94,960 per year, so the chances are high that becoming a surgeon will result in a six-figure salary. The average salary of a surgeon is higher than the average salary of other doctors, with the exception of anesthesiologists, who earn roughly as much as surgeons.

The top-paying state for surgeons is Nebraska, with a mean annual salary of $287,890. Following Nebraska is Maine, New Jersey, Maryland and Kansas. Top-paying metro area for surgeons include Cincinnati, OH-KY-IN; Winchester, WV-VA; Albany-Schenectady-Troy, NY; New Orleans-Metairie, LA; and Bowling Green, KY.

Where Surgeons Work

The Average Salary of a Surgeon

According to BLS data, most of the surgeons in the U.S. work in physicians’ offices, where the mean annual wage for surgeons is $265,920. Second to physicians’ offices for the highest concentration of surgeons are General Medical and Surgical Hospitals, where the mean annual wage for surgeons is $225,700. Colleges, universities and professional schools are next up. There, surgeons earn an annual mean wage of $175,410. A smaller number of surgeons are employed in outpatient Care Centers, where the mean annual wage for surgeons is $277,670. Last up are special hospitals. There, the mean annual wage for surgeons is $235,770.

Becoming a Surgeon

You may have heard that the cost of becoming a doctor, including the cost of medical school and other expenses, has soared. Aspiring surgeons must first get a bachelor’s degree from an accredited college, preferably in a scientific field like biology.

Then comes the Medical College Acceptance Test (MCAT) and applications to medical schools. The application process can get expensive quickly, as many schools require in-person interviews without reimbursing applicants for travel expenses.

If accepted, you’ll then spend four years in medical school earning your M.D. Once you’ve accomplished that, you’ll almost certainly enter a residency program at a hospital. According to a 2018 survey by Medscape, the average medical resident earns a salary of $59,300, up $2,100 from the previous year. General surgery residents earned slightly less ($58,800), but more specialized residents like those practicing neurological surgery earned more ($61,800).

According to the American College of Surgeons, surgical residency programs last five years for general surgery. But some residency programs are longer than five years. For example, thoracic surgery and pediatric surgery both require residents to complete the five-year general surgery residency, plus two additional years of field-specific surgical residency.

Surgeons must also be licensed and certified. The fees for the licensing exam are the same regardless as specialty, but the application and exam fees for board certification vary by specialty. Maintenance of certification is also required. It’s not a set-it-and-forget-it qualification. The American Board of Surgery requires continuing education, as well as an exam at 10-year intervals.

Bottom Line

The Average Salary of a Surgeon

Surgeons earn some of the highest salaries in the country. However, the costs associated with becoming a surgeon are high, and student debt may eat into surgeons’ high salaries for years. The costs of maintaining certification and professional insurance are significant ongoing costs associated with being a surgeon.

Tips for Forging a Career Path

  • Your salary dictates a lot of your financial life, such as how much you can afford to pay in rent and the slice of your paycheck that goes to taxes. However, there are some principles that apply no matter your income bracket, like the importance of an emergency fund and a well-funded retirement account.
  • Whether you’re earning a six-figure surgeon’s salary or living on a more modest income, it’s smart to work with a financial advisor to manage your money. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

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