How to Get a Personal Loan
If you’re thinking of borrowing money to meet a financial need, you can consider taking out a personal loan. With this type of loan, no collateral (house, car, etc.) is often required. But of course, there are other things you should know about before finally deciding to apply for one.
A strong credit score will increase your chances of getting a personal loan and a lower interest rate. If yours isn’t exactly stellar, do something to improve it before you apply. Start by making payments on time and avoiding maxing your cards. Request a free credit report as well and review it, making sure any errors are disputed.
Through loan prequalification, you can see what what potential offers you might get. A lot of online lenders will do a soft credit check during prequalification, which will have no effect on your credit score, so take advantage of it early on. During prequalification, you will be required to give the lender some essential personal information, such as your Social Security number, source of income, employer or business background, etc.
As you will find with any other type of financing, there are terms and conditions attached to personal loans. Pay close attention to prepayment charges, APR additions (your APR should cover all fees from the get-go) and automatic withdrawals (get a low balance alert programmed into your checking account to avoid overdraft fees). Look for a lender that also offers flexible payment features, forwards payments to your creditors (if you’re consolidating debt), and actually reports payments to the credit bureaus.
Submitting a Personal Loan Application
Once you have compared a number of loan providers, you can pick one that is most suitable to your needs and preferences. Basic requirements you need to prepare are state-issued identification (driver’s license, passport, etc.), proof of address (utility bills), and proof of income (W-2 forms, bank statements, tax returns or pay stubs). Expect the lender to do a hard credit check as well, and know that this will affect your scores to a minor extent. Provided all needed documentation is in place and you actually meet the bank’s or lender’s requirements, the funds will likely be forwarded to your account in a week’s time.
Though a personal loan can surely help you survive a financial difficulty, it is important to explore and study your options before picking one. Look for the lowest rates, borrow only money you need, and make on-time payments. And remember, make comparisons because this is the only way to know which option is best.