Then, you simply pay Earnin what you think is fair as a “tip”-it’s not required, and you could pay $0 if you wanted. Earnin asks you to pay what you can for the service to help cover the other borrowers who may not be able to pay anything for it. It’s a sort of community-driven fee system.
While Earnin can be helpful, you can only access small sums of money at a time. Setting up can be cumbersome and requires a check and a regular pay schedule with direct deposit. If you’re facing a bigger emergency-like an expensive car repair-you may need to find another source of money to pay for it.
What Is a Personal Loan?
You qualify for personal loans primarily based on your credit history and income. You typically do not need to pledge collateral to get approved for a personal loan, so you don’t necessarily need assets. As a result, you receive funds that you can use for almost anything (the funds aren’t tied to a home or auto purchase, for example).
How Do Personal Loans Work?
- Application: To get a personal loan, apply with a lender by providing information about yourself, including personal information and financial details. For example, you typically need to tell the lender how much you earn, and you also need to provide an address, Social Security number, and other personal information.
- Approval: Lenders evaluate your application to determine whether or not to approve your request. They typically review your credit score, how much income you earn relative to your debt, and other factors. If the lender agrees that you can repay the loan, you might receive one or more options (such as 2-year or 5-year loan offers).
- Funding: Lenders often fund your loan by transferring money directly to your bank account. If there are any origination fees, they’ll be taken from the loan amount before it’s deposited. From there, you can spend the money on whatever you need.
- Repayment: With the loans listed here, you typically repay with automatic monthly payments that lenders pull from your bank account. If you have a fixed-rate loan, that monthly payment does not change over time, and you gradually pay down your loan balance. With variable-rate loans, the payment can change if interest rates move.
With a fixed-rate loan, the interest rate stays the same for the entirety of your loan term. As a result, your monthly loan payments never change, and it may be easier to budget for them. A variable-rate loan has a rate that can fluctuate, potentially causing your payment to rise (or fall, if you’re fortunate).
Lenders choose what types of borrowers they want to work with, and there’s no single credit score required for a personal loan. That’s why it’s important to find a lender that works with people like you. If you have less-than-perfect credit, look for lenders who focus on that market. If you happen to know your credit score, you can always contact lenders and ask them if you’re a good fit for their products.
When Is It a Good Idea to Get a Personal Loan?
A personal loan can provide funds for just about anything. It may make sense to use a personal loan whenever you need to borrow and you want to keep costs low. Still, there’s always a cost to borrow money, so you need to decide if it’s wise to borrow at all.