Personal Loans and Tips for Getting One
If you’re thinking of borrowing money to meet a financial need, you can consider taking out a personal loan. To get this kind of loan, there will usually be no collateral needed. But of course, there are other things you should know about before finally deciding to apply for one.
A strong credit score means it will be easier to qualify for a personal loan and getting a lower interest rate. If yours isn’t exactly stellar, do something to improve it before you apply. The two most important steps you can take are making on-time payments and spending below your credit limits. You’ll also want to request a free credit report, review it, and get errors fixed, if any.
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. Prequalification will require you to provide some basic personal information such as your Social Security number, monthly debt obligations, income, employer information, and the like.
Terms and Conditions
Like any other type of financing product, personal loans come with terms and conditions. In particular, look out for prepayment penalties, a surprise APR (this figure should reflect the entire cost of your loan, meaning all costs included, and automatic withdrawals (to avoid overdraft fees, set up a low balance alert with your bank. Also make sure that the lender reports payments to credit bureaus, pays directly to creditors if you’re consolidating debt, and has generally flexible payment features.
Submitting an Application
After comparing a few loan providers, you should be able to choose one that best aligns with your needs and preferences. Before you apply for a personal loan, be ready with a state-issued ID (Social Security card, driver’s license, etc.), address verification (copy of lease, utility bills, etc.), and evidence of income (pay stubs, tax returns, etc.). The lender will run a hard credit check too, and you should know that this will have an impact on your credit scores. As long as all your documents are in order and you meet the lender’s requirements, the money will be delivered to your bank account usually within 7 days.
While a personal loan can certainly help you in a financial need, you need to go over your options carefully before settling on one. Look for the lowest rates, borrow only money you need, and make on-time payments. And lastly, be sure to make comparisons – there’s no other way to see which option is best for you.