Unsecured personal loans for teachers can help even out cash flow during the summer when the school stops depositing money into your checking account, and when you might want to take advantage of the free time to reward yourself with a vacation.

Tenured educators and those with top-notch risk scores earn the lowest interest rates on personal loans.

Those with bad credit may still qualify but may incur a higher rate. Lenders more readily approve secured accounts, as they can repossess the collateral to offset losses in the event of default.

Debt consolidation can help teachers lower their monthly payments by stretching out the settlement time frame, while payday cash advances are for true emergencies only.

Unsecured Personal Loans for Teachers

Unsecured personal loans can help school teachers fund temporary cash needs without having to pledge collateral such as a house, boat, car, life insurance, or investment account. Your signature is a promise to return the borrowed amount according to terms. If you default, the lender has nothing to repossess without suing in court.

It’s easy to get a personal loan. Certain teachers may qualify for low-interest rates, depending upon qualifications.

Low Interest

Some teachers may qualify for low-interest unsecured personal loans. Banks charge the lowest rates to borrowers with the best qualifications – job security, sufficient income, and a history of on-time payments.

Tenured teachers have the greatest level of job security, and have an advantage in obtaining the lowest personal loan interest rates. A tenured position means that the lender can feel confident that you will have a steady income for the duration of the term.

Your debt-to-income ratio also determines your ability to qualify for the lowest interest rate. Those with the highest monthly income relative to the projected monthly payment present the best qualifications.

Those with good to excellent credit scores are most likely to qualify for the lowest interest rates. Lenders prefer a long history of on-time disbursements, across a wide variety of account types.

First-time borrowers also benefit from the greater level of job security. Public schools in particular offer a high level of job security, which makes it easier for younger teachers to qualify for a better interest rate.

Over the Summer

Unsecured personal loans can help teachers overcome cash shortages over the summer break. Many public school districts operate on ten-month, rather than twelve-month payroll cycles. In addition, the break provides educators with the freedom to enjoy vacations – which entails added spending.

A personal loan can help bridge the funding gap caused by the combination of higher travel expenses and temporary stop in paychecks during summer months. Teachers that employ disciplined budgeting during the school year to build up adequate savings can avoid having to borrow money.

Most lenders require monthly repayment. Keep in mind that you may need to repay the note during the next summer or two. If you take out a twelve or twenty-four-month term, you could still owe money every month over subsequent breaks. Plan accordingly.

Personal Loans for Teachers with Bad Credit

Obtaining personal loans for teachers with bad credit sometimes entails a different strategy. Having a poor risk score hurts your chances of approval, but does not automatically disqualify every applicant. Remember that having a steady income is a big advantage.

Request a personal loan to get the funding you need. You can use the extra money to consolidate debts. Borrowing against your next paycheck may be necessary for emergencies.

Payday Cash Advances

Payday cash advances can help teachers with bad credit obtain cash for emergencies. The lender secures the funding with a post-dated check or pre-approval to draft money directly from your checking account after your bank receives your next paycheck. Most lenders will not pull a copy of your consumer report. Nor will they view your risk score.

Educators should use payday cash advances for true emergencies such as for car repairs. While they do not charge interest, the origination fees are large relative to the amount of time you have access to the funding. Since your next paycheck may arrive in the next month or sooner, the turnaround time is very short.

If you choose to roll over a payday cash advance, you will incur a subsequent origination fee. If you continue rolling over, the fee amounts grow quickly and translate into a very high annual percentage rate. This explains why this borrowing vehicle is illegal in many states, as the most vulnerable population can easily run into trouble.

Debt Consolidation

Debt consolidation loans can help teachers with bad credit lower their monthly debt service obligations. While combining several accounts does not reduce what you owe, lower monthly payments associated with longer settlement terms may improve the odds that you will not fall behind. Delinquencies stain your consumer report for seven years.

Teachers with bad credit are more likely to gain an approval when they apply for a secured debt consolidation loan. Secured contracts such as a home equity line of credit or a vehicle title financing are less risky. Lenders can repossess the collateral (your home, boat, or car) if you default, without going to court first. You agree to upfront surrender the asset should this event occur.

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Posted 12/1/15 8:18 PM by Kevin Haney MBA