Personal loans can help you handle a variety of situations. Whether you need the loan to meet an unexpected financial need, improve your home, consolidate other loans, or another reason, a personal loan can help.
HSBC, one of the largest banks in the United States offers a variety of loans but does not offer personal loans.
Learn which types of loans you can get from HSBC. Find out what to keep an eye out for when looking for a personal loan from another lender.
What Loans Does HSBC Offer?
As one of the biggest banks in the United States, HSBC has to be able to handle the many needs of its customers. To do this, HSBC offers:
- Home Equity Lines of Credit (HELOCs)
- Credit cards
A mortgage is a loan that is used to purchase real estate, whether it be empty land or an existing home. Often, the largest loan a person ever takes will be their home mortgage. Depending on the cost of the house, mortgages can regularly run into the hundreds of thousands or even millions of dollars.
Mortgages come in two flavors: fixed-rate mortgages and adjustable rate mortgages (ARMs).
Fixed rate mortgages have a set interest rate and monthly for the whole life of the loan. Often, these loans last 15, 20, or 30 years. You’ll know exactly how much you’ll pay each month from the start of the loan. You’ll also know exactly how much you’ll pay in total. Your interest rate will never change unless you refinance the loan.
An ARM will have an initial period where the interest rate will not change. Then, it will have a change limiter, which determines how often the rate can be changed. For example, a 5/1 ARM will have a fixed interest rate for the first 5 years of the loan. After that, the rate can change annually. This is good if rates go down, but if rates go up, so will your rate. That can make your payments increase. ARMs have better interest rates than fixed rate mortgages, but the payment volatility can make them risky.
Home Equity Lines of Credit
A home equity line of credit lets you access some of the equity you’ve earned in your home, turning it into cash.
Much like a credit card, a HELOC is a revolving loan. You can withdraw cash from the HELOC whenever you need it. If you do, you’ll receive a bill each month until you pay the loan in full. You’ll need to make minimum payments until the loan is paid, but you can pay extra, or pay the full loan whenever you’d like. When you don’t need extra cash, leave the HELOC alone, it’ll be waiting for when you need it.
Because a HELOC is secured by the value of your house, it has a much lower interest rate than a credit card. This makes a HELOC a good way to fund home improvements or consolidate other loans.
Credit cards are among the most common type of loan out there. When you need to buy something, you can swipe your card instead of paying with cash. When you do, the card issuer will pay the store for you, immediately lending you the necessary money. Each month, you’ll get a bill, with a specified minimum payment.
You should try to pay the bill in full each month. If you just make the minimum payment you’ll incur interest charges, sometimes at 20% APR or higher. This can make even a small loan expensive.
If you use your card responsibly, it might even save you money. Many cards offer cash back or travel rewards that pay you for using them.
Where to Look for Personal Loans
Though HSBC doesn’t offer personal loans, there are a lot of options out there.
You can opt for a loan from a large national bank. Large banks often have lots of money to lend and publish the details of their loans on their website. You’ll know exactly what you’re getting into with a loan from a national lender.
Smaller, local banks might not have as much cash to lend as a national chain, but they have benefits. Community banks can be more flexible, especially if you’ve been a customer for a long time. They might be able to get you a loan you couldn’t get elsewhere.
Online lenders are also an option, where you might find lower fees and rates.
What to Look for in a Personal Loan
When you want to apply for a personal loan, the number of options can be overwhelming. Start by finding a few lenders that you feel confident will approve you. Some lenders target consumers with good credit. Other lenders have more flexible requirements.
Once you have narrowed down your list to just a few banks, compare these aspects of their loans.
Many personal loans charge origination fees, either flat or percentage based. These fees will immediately increase the amount you owe on the loan. For example, if you borrow $ 5,000 and pay a $ 50 origination fee, your first bill will show a balance of $ 5,050, plus interest. The extra $ 50 came from the origination fee.
Some loans also charge fees for late or missed payments or paying the loan in full ahead of schedule. Try to find a loan that charges no fees, or relatively low fees.
A loan’s term is how long the loan will take to be paid in full. So, if you take out a loan with a 36-month term in August of 2018, you’ll make your last payment in August 2021.
Loans with longer terms have lower monthly payments, which can help your budgeting. However, longer terms often mean higher interest rates. Even without a higher rate, taking longer to pay the loan back means more interest will accrue.
Look for a loan with a term that results in a monthly payment you can manage, without leaving the loan open for longer than it needs to be.
Your loan needs to be big enough to meet your financial need. Don’t apply for a loan from a lender who limits loans to $ 25,000 if you need $ 50,000. Make sure the lender is willing to loan the amount that you need.
Fund Disbursing Period
In some cases, you need money and you need it fast. Some lenders take weeks to get your loan deposited while others take just days. Look for a lender with the fast disbursing period.
If you already have a bank account with a bank that offers personal loans, check if there’s a relationship discount. Many banks will offer fee waivers or rate reductions if you sign up for automatic payments from your checking account.
How to Apply for a Personal Loan
When you apply for a personal loan, the lender will judge whether you’ll actually pay the loan back. The lender will need some information to make that judgment, so you’ll have to provide that info.
Some of the information you may be asked to provide is:
- Date of birth
- Proof of identity, such as a driver’s license
- Social Security number
- Annual income
- Proof of income, such as bank statements or paystubs.
- Verification of employment
Though providing all that information may seem daunting, it’s best to provide as much information as you can. A lender who knows a lot about you will be more comfortable with offering you a loan or offering a lower interest rate.
How to Improve Your Chances of Getting Approved
You can improve your chances of getting approved for a personal loan in a few different ways.
Improving your credit score is the most obvious way of improving your chances. Unfortunately, the best way to improve your credit score is to make on-time payments over the course of years.
For a short-term bump in your score, pay down some of your existing debts if you’re able to. This will reduce your credit utilization ratio: the ratio of your total debts to the combined credit limits of your credit cards.
You can also improve your odds of getting approved is to improve your debt-to-income ratio. This ratio is important because it shows how easy it will be for you to handle a new monthly bill. Someone who makes $ 20,000 a year could never pay back $ 250,000 in debt. Someone who makes $ 150,000 a year could handle $ 250,000 in debt and might be able to take on more while still making payments.
You can improve this ratio by increasing your income or paying down existing debts.
Finally, when you apply for a loan, make sure it’s for a good reason. A lender might be more lenient if you’re trying to consolidate credit card debt. They’re likely to be stricter if you’re trying to fund an extravagant vacation.
Though HSBC doesn’t offer personal loans, many banks do. If you have need of a personal loan, for any reason, use these tips to find the best one available.