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 certainly, there are other points you should take into account before applying for one.
With a strong credit score, you have a better chance of qualifying for a personal loan and getting a lower interest rate. If yours is hardly impressive, work on it before submitting an application. The two most important steps you can take are making on-time payments and spending below your credit limits. Request a free credit report as well and review it, making sure any errors are disputed.
Pre-qualifying for a loan offers you a glimpse of the offers you will likely receive. In most cases, an online lender will do a soft credit check when prequalifying an applicant, a process that will have no impact your credit score so go for 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.
As you will find with any other type of financing, there are terms and conditions attached to personal loans. Specifically, you’d like to watch out for a surprise APR (this should be the full cost of your loan, no additions), prepayment penalties, and automatic withdrawals (avoiding overdraft fees can be as simple as setting up a low balance alert on your checking account). See to it as well that the lender reports payments to credit bureaus, pays creditors directly (for debt consolidation) and has flexible payment features.
Applying for a Personal Loan
After reviewing a few lenders and making comparisons, it’s time to pick the one that fits your needs most perfectly. 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). The lender will run a hard credit check too, and you should know that this will have an impact on your credit scores. With all your paperwork in perfect order and assuming you meet all the requirements of the loan provider, you will probably receive the funds in your bank account within a week.
A personal loan can help you during financial difficulty, but make sure you review your options thoroughly before making a choice. Look for the lowest rates, borrow only money you need, and make on-time payments. And finally, make comparisons in order to find the best.