Getting a loan at a very young age is difficult. You’ve got to do more than just apply, because your credit history is non-existent, savings are insufficient, and income may not be up to most lender’s expectations. If you’re an 18-year-old and in a financial need, for example, a $2,400 loan, keep reading this guide.
Loan options for 18-year-olds
Even if it seems at first, that all offers are just for the experienced borrowers, there is still some variety available for the younger people:
- Borrowing from your current bank
- Small unsecured loan
- Credit-builder loan
- Secured car loan
- Getting a loan with a cosigner
So don’t despair, and you’ll find something suitable. Even if your credit history is already compromised, you can get a loan you need from Bad Credit Loans in Nebraska.
How do I get approved for a loan at 18 years of age?
Don’t sweat it and just follow the below steps to up your chances:
Step1: Obtain your credit report and make a copy
Knowing your credit score might give you a general idea on what rates and terms you can expect, and which lenders you qualify to borrow from. Many providers will require a copy of the report anyway.
Step 2: Gather your employment history
Most lenders don’t work with clients that don’t have a source of income. Even part-time jobs or benefits would boost your eligibility for a loan. Think about what jobs you’ve had before or currently have that you can show to a potential lender, so they know you’ll be able to pay back.
Step 3: Find a cosigner
Though you are not required to get a cosigner at the age of 18, doing so would help you become eligible for higher amounts and more competitive rates. Ask relatives or close friends who have a better credit history than yourself to help you out. Just be careful, as not all lenders permit a cosigner on personal loans, so it could narrow down your choices.
Step 4. Compare your options.
It is always a good idea to research as many lenders as possible to find the best terms. True, it requires work and the process may be not as fast as you’d hoped, but you may find a good deal. While choosing among the variety of providers, pay attention to:
- If this lender is willing to give a loan to someone without a credit history.
- If this lender accepts cosigners.
- How competitive the interest rate is. Note, that it can be fixed or variable.
- What the minimum and maximum loan amounts are.
- The criteria for the amount available for you to borrow.
- What fees you will be charged and how often.
- Other features, like offset facility or the ability to make extra repayments.
By comparing all of the above characteristics, you’ll be able to take out the best possible loan for your financial needs.
Step 5. Get a preapproval.
Fill in a simple application and get a preapproval or a prequalification, so you know the estimate of the APR, loan amount and loan term you can expect from the particular lender, prior to going through a hard credit check. You’d want to avoid the latter, as it may make your credit score dive for a period of time, and it’ll be harder to qualify for another loan. Keep in mind though, that in a case of emergency, you can visit Bad Credit Loans in Iowa and get a loan even with a poor credit history.
Step 6. Apply!
Be attentive and extra accurate while filling out the application. If it’s done incorrectly you might get rejected. Check everything two or even three times over, and make sure you’ve left no inconsistencies.
Step 7. Read the terms carefully before signing.
If you’re succeeded and are accepted, make sure to read all the terms and conditions of your loan very carefully before you sign any documents. Don’t be afraid to ask for assistance from a lender or a family member or a friend to help you understand the difficult parts.
How else can I get a loan at 18?
Some alternatives to getting a personal loan are available for those attending some sort of school. There are lenders that consider your college GPA and earning potential instead of your credit score. Another good idea is to use your student loan to cover your personal expenses and housing after your tuition and fees are dealt with.
Do you have to be 18 to get a loan?
Mostly, yes. Though in Nebraska and Alabama you have to be 19, and in Mississippi – 21 years old to get a loan.
Other useful tips for getting a loan at 18
There are a few hacks and tricks left that you can use to obtain the desired sum, even a big one, like a $5,300 loan.
- Savings are essential. Show a potential lender that you’re good at saving up for later, so they will be more willing to give you a green light. This is a good strategy while applying with your current bank because they can take a quick look at your account info to be sure.
- Have a deposit if you’re applying for a new car loan. This will testify about your stable financial position. The bigger the deposit, the less you need to borrow, and the more chances to get approved.
- Ask your employer to confirm your position if you’re only employed casually, or have been working at a current place only for a short time.
- Apply for a lower amount. If your credit history is unclear and you income is not very stable, lenders are hesitant to provide large amounts of cash. Try aiming for smaller loans.
- A secured loan is less risky for the provider because they have an assurance that their money won’t be lost.
Of course, none of the above can guarantee you an automatic approval. After all, it is difficult to obtain a loan at 18 with no credit. You might have to find another way of getting money, like another job or borrowing from a friend.
Advantages and disadvantages of getting a loan at 18
So, what good can a loan do you?
- Cover the funds you need for all of the essentials.
- Build a good credit history, that will affect your eligibility for other types of loans and also better rates later in life.
But with upsides come downsides.
- You can only qualify for a limited amount of money, which may be not enough for your specific financial situation.
- The rates you’re offered will most likely be very high, due to the absence of reliable credit history and stable income.
- Taking out a loan always poses a risk of spiraling into more debt.
Taking all of the above into account remember that careful budgeting is a key to financial stability. Go into the process of getting a loan prepared and cool-headed and be sure that you’ll be able to repay all the expenses.
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