Getting a personal loan
Personal loans are one of the best and most ideal types of loans, however before you apply you need to ensure a few things are in order. One thing you should do before applying is check your credit score, this way you will have an idea of whether or not you will get the loan, and if you will get a decent interest rate.
Looking for an ideal lender is also important too. Looking for an ideal lender is a lot like trying to find the ideal insurance company. Do some investigating, get an interest estimate, and have a look at multiple options.
There are so many options for a personal loan from online lenders, so be prepared to do some extensive research to help you find your ideal lender, do not fret, you will eventually find one that fits your goals and your budget.
What is a personal loan?
Before we get into the nitty-gritty, let’s take a look at what a personal loan actually is. This is a form of credit that can help you to make a big purchase, or consolidate high-interest debts. As personal loans generally have lower interest rates than credit cards, they can also be used to consolidate multiple credit card debts into a single, lower cost monthly payment.
They do have many uses however, and this is what makes that a generally popular type of loan.
Always check your credit score
Now, the first thing you should do as you seek out a loan is to check your credit score to ensure that you will meet the minimum credit requirements. Some lenders will publically share this information, however, not all do so. So, as a rule of thumb it is a good idea to have good credit, at least 670. While some lenders will offer loans for applications with fair or bad credit (anything below 670), you may end up getting a higher interest rate.
Remember you do not necessarily have to pay to check your credit score, as you can use free credit score websites, banks, or lenders, and even credit card issuers, as they can often offer free access to scores, even if you are not an active customer or account holder.
Prequalify for loans through multiple lenders
Many lenders may allow you to check your rate and the likely terms without causing a hard inquiry to your credit report, which may damage your score for a year.
You can use a lenders’ pre qualification tool to compare offers and get an idea of how likely you are to get approved for a loan at a competitive rate. Requesting a prequalification might have avoided you getting dinged with hard inquiries for loans that you will not actually qualify for.
When visiting websites, check for an invitation to submit your information, this will likely be a button that says ‘check your rate’.
To find an ideal loan, you can look for online loans in your area, such as searching for personal loans in Mississippi, and so on.
Compare your offers
It is likely that you will receive the loan terms you may qualify for once you have completed the prequalification process.
If you happen to prequalify with multiple loans, then you will need to compare these offers to understand which is the best loan for your situation.
You should always compare the APR, the loan terms (how long you have to repay the loan), the amount you can borrow, the monthly payment amount, the origination fee (which can be between 1 and 8 percent), and if there is a prepayment penalty.
Completing your application
Once you have prequalified for a loan, a lender will give you a window of time, perhaps a few weeks, to proceed to a formal application. The information you will need to complete your application will vary from lender to lender. However, you can expect to fill in basic contact information and details that help confirm your identity, such as your Social Security Number.
You may also be asked about your household income, your job status, your employer and your profession, your homeownership or rental status, your monthly rent or mortgage payment, your home equity if you are an owner, as well as checking and savings account balances and any assets and investments.
If you are approved for a loan then you will receive your final loan documents outlining the loan details, including the rate, term, amount and your monthly payments. Once you sign these, you will receive your funds directly and once you receive the funds this is the beginning of your repayment terms, and you must ensure you do not miss a payment.