To cover emergency spending or big purchases, people may take a credit card or a home equity loan. However, a $7,000 personal loan is a less risky option that is suitable even for borrowers with a less excellent credit history.
Here, you will find the information on how and where to get a suitable $7,000 personal loan.
How a $7,000 loan works?
A $7,000 personal loan allows the borrower to get a lump sum quickly. The borrower can use the funds for almost anything. For example, to make a big purchase, debt consolidation, pay for a vacation, home improvement projects, or emergency expenses. Such a loan has a term from 1 to 7 years.
Borrowers pay a $7,000 personal loan in equal monthly payments. The amount depends on your credit score, interest rate, and loan term. You can calculate the amount on the loan payments using personal loan calculator available on the lenders' websites. Types of $7,000 personal loans are debt consolidation loans, unsecured loans, and secured loans.
Where can I get a $7,000 loan?
The $7,000 personal loan is widespread among lenders. So, the borrower can choose a suitable lender based on their credit report, solvency, and needs.
The credit unions are non-profit organizations issuing funds to the union members. The members are also owners of unions. Usually, such organizations can offer fewer loan options but have a less eligibility requirement.
Banks offer personal loan amounts up to $10,000 and higher. For a bank, you need to have a minimum credit score of 629. You also need an active bank account for at least several months. Banks prefer to work together with their customers.
Online lenders are the most popular personal loan lenders because you can go through the application process entirely online. Online lenders have less stringent requirements for credit history, and some specialize in loans for low credit scores. You can get a pre-qualification with several lenders, which does not affect the credit report. This way, you determine the best option.
It is also possible to take a $7,000 loan from a peer-to-peer lender. P2P lending is a type of agreement between two people on loan without contacting financial institutions. Such lenders set their credit conditions and usually have a small maximum loan amount. Interest rates for such loans can be unpredictable. The borrower must be careful when working with such lenders, as they may encounter scammers.
How to get a $7,000 loan?
After the borrower has decided on the type of lender that suits them, they need to consider several aspects of obtaining a $7,000 loan. Study this in detail to avoid scammers, predatory lenders, or other problems.
Qualifying for a $7,000 loan
To be eligible for a $7,000 personal loan, the borrower must meet these criteria:
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Be of a majority age, 18 years old in most states
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Be a citizen or permanent resident of the United States
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Have a stable source of income.
Usually, lenders need to set a certain amount that the borrower should receive per month. The borrower's solvency is assessed using their debt-to-income (DTI) ratio. The DTI ratio is calculated as the total amount of all expenses for each existing debt divided by monthly gross income. The borrower should have a DTI ratio of 36%-43%.
Most lenders also require the borrower to provide the documents necessary to confirm the borrower's identity or income level. Such documents include a driving license, passport, state-issued ID, pay stubs, tax returns, W-2s, and bank statements.
Credit score requirements
Before applying for a $7,000 loan, the borrower must check for compliance with the minimum credit score requirement. Request the credit report free from three credit bureaus: Experian, TransUnion, and Equifax.
A good credit score range is from 670 to 739. Credit unions or online lenders may require the borrower to have a fair credit score that starts at 629. Some online lenders may require at least a 600 FICO credit score. As long as the borrower's credit score remains between 580 to 629, they can be qualified for most loan offers from $7,000 loan lenders. A borrower with a lower credit score needs to look for specialized lenders who can accept borrowers with a 500 FICO credit score. Borrowers with poor credit need to look for a co-singer with a high credit score or take a secured loan or cash advance.
In case you have a low credit score or minimum score relevant to requirements, you may improve it since the higher your credit score it, the lower the interest rates you can get. Taking a $7,000 personal loan amount with a high annual percentage rate (APR) may be challenging.
The funding time
Usually, the borrower receives funds from personal loan lenders within 1-2 business days. The funds are deposited into checking or savings accounts. An online lender can offer the borrower same-day funding. The loan approval should be obtained before noon, so the transaction can be processed on the same day. The requested loan amount will arrive by the evening of the same working day. Such lenders usually have higher interest rates.
How to get a $7,000 loan with bad credit?
A borrower with a low credit score can take advantage of several ways to get a $7,000 personal loan.
- Get $7000 loans from online lenders. Some online lenders have less stringent requirements for credit scores than other types of lenders. A small part of such lenders specializes in issuing personal loans to borrowers with a low credit score but with a stable source of income. However, such lenders most often have interest rates higher than traditional lenders. If the borrower urgently needs funds, they can use this method.
- Include a co-signer in the loan application. Most lenders that issue $7,000 personal loans allow the borrower to include a co-signer with a high credit score in the loan application. A co-signer can be a family member or a friend of the borrower. The presence of such a co-signer also allows the borrower to get better credit conditions. A higher credit score will give them a lower interest rate and a more flexible repayment term.
- Apply for secured loans. A secured personal loan is a loan guaranteed by collateral. Secured loan lenders do not make a credit check and therefore do not have a minimum credit score requirement. The collateral the borrower deposits when taking a secured personal loan is called a security deposit. A security deposit is a certain amount of money that is returned in full to the borrower after repayment of the debt. If the borrower has problems paying a $7,000 personal loan, the lender does not return the security deposit to them. Such a loan usually has an interest rate lower than an unsecured loan because it has less risk for the lender.
The cost of a $7,000 personal loan
The main fee for a $7,000 loan, besides the principal amount, is the interest fee by the interest rate. Annual percentage rates (APR) for this type of loan depend on the borrower's credit score, their solvency, and the state where they receive the loan. Most personal loans have an annual percentage rate (APR) ranging from 5% to 36%. Many lenders have additional fees that can increase the borrower's loan cost.
- Some borrowers take origination fees. Usually, the origination fee is 1% to 5% of the loan amount. They are withdrawn from loan amounts before borrowers receive them. If a borrower receives financing with a loan amount of $7,000 and an origination fee of 1%, they will receive $6,930 for their checking or savings account.
- Some lenders charge a late payment fee. The amount of late fees ranges from $35 to $40. To avoid paying late fees, the borrower needs to make on-time payments on the loan. The borrower can enable automatic payments not to be late with payments.
- The less common fee is the prepayment fee. This fee is punitive and is charged to borrowers if they want to close loans before the end of loan terms. Most lenders do not require payment of such fee, however, with the presence of a small condition. The borrower can completely close the loan in advance but will have to pay the amount of interest that would have accumulated at the end of the loan term.
