How to get preapproved for a personal loan |

How to get preapproved for a personal loan

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What you’ll need to know to get the green light from a lender.

Chances are you’ve heard the term preapproval before, but it often only comes up when talking about mortgages. You might not have seen it attached to personal loans, but receiving preapproval for a loan is a vital part of the application process. Our guide will take you through what preapproval means and how you may be able to get a sneak peak into how much you could be able to borrow.

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    What is preapproval?

    A preapproved loan is an offer of a loan pending full approval. Preapprovals are available with many types of loans, including personal loans, car loans and mortgages. They usually remain valid for several months, but they won’t guarantee you funding.

    When a lender is willing to consider you for a personal loan, they’ll often notify you of your preapproval. Most online applications will end with either a preapproval offer or denial based on your financial situation and credit score. If you’ve been preapproved, your lender will likely contact you to finalize the loan and determine if you’re officially approved.

    You may also receive an unsolicited offer from a lender in the mail or through an email. These are to encourage customers who may not have previously considered borrowing, but even though you receive a preapproval notice, you still may not qualify for a loan.

    How the preapproval process works

    When you’re ready to apply for a loan, follow these steps to see if you can be preapproved by your lender.

    1. Select a lender from the table below.
    2. Fill out a preliminary loan application.
    3. Wait while the lender reviews your application.
    4. Receive your preapproval decision.
    5. Continue to the official application.

    Your lender will likely contact you to confirm the information you’ve submitted if you’re preapproved for a loan. Be sure everything is accurate. At this point, your lender may take a day or two to fully underwrite your loan application. If you do receive an official approval, review your contract carefully and decide if you still want to move forward with the loan.

    It’s worth noting that in many cases, preapproval takes place online within just a few minutes. This is because the lender and its underwriting team haven’t evaluated your application yet and are using software to analyze the information you supply. On-the-spot preapprovals are often just indications that you may qualify for a loan.

    If you’ve received a letter from a lender that says you’re preapproved, then this process doesn’t apply to you. The lender has used information available to them to determine that you may be eligible for one of their products. If you want to apply, you’ll need to follow the steps given in your letter.

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    Rates last updated October 19th, 2018

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    Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
    Name Product Product Description Min. Credit Score Max. Loan Amount APR
    Credible Personal Loans
    Get personalized rates in minutes and then choose a loan offer from several top online lenders.
    Good to excellent credit
    4.99%–36% (fixed)
    Even Financial Personal Loans
    Get connected to competitive loan offers instantly from top online consumer lenders.
    4.99%–35.99% (fixed)
    SoFi Personal Loan Fixed Rate (with Autopay)
    No fees. Multiple member perks such as community events and career coaching.
    6.99% to 14.87% (fixed)
    Best Egg Personal Loans
    A prime lender with multiple repayment methods.
    640 FICO®
    5.99%–29.99% (fixed)
    LendingClub Personal Loan
    A peer-to-peer lender offering fair rates based on your credit score.
    6.16% to 35.89% (fixed)
    Monevo Personal Loans
    Quickly compare multiple online lenders with competitive rates depending on your credit score.
    3.09%–35.99% (fixed)
    FreedomPlus Personal Loans
    Consolidate debt and more with these low-interest loans. Cosigners welcome.
    4.99%–29.99% (fixed)
    NetCredit Personal Loan
    Check eligibility in minutes and get a personalized quote without affecting your credit score.
    34%–155% (Varies by state) (fixed)
    OppLoans Installment Loans
    Installment loans with competitive rates from a top-rated direct lender.
    Bad credit accepted
    99%–199% (fixed)

    Compare up to 4 providers

    How might a personal loan preapproval benefit me?

    If you seek out preapproval, it can help you feel more confident when making a decision between different loans. You’ll know that a lender is likely to lend you the funds you need, and you’ll have an estimate of how much the loan will cost. Choosing the right loan can be difficult, but knowing your potential interest rate and the fees attached to the loan can help you make the right choice for your finances.

    Is there a difference between conditional approval and preapproval?

    Both terms are used often and may be confusing for people not used to industry jargon.

    Preapproval is a quick scan of your application to confirm your credit score, income and personal details align with the lender’s qualification criteria.

    Conditional approval is given to applicants who may have to supply extra information to the lender. Pay stubs, bills and employment records may be asked for at this point. It means that the lender is likely going to approve your loan, but it still needs to gather specific information for its underwriting team.

    Some personal loan lenders will use the terms interchangeably. If you’re still confused after receiving preapproval or conditional approval, don’t hesitate to contact your lender and ask questions.

    How do lenders identify customers to offer preapproved loans to?

    Banks and lenders possess quite a bit of information about their customers and will use this knowledge to promote various products. They make this decision based off your credit score and the personal information you’ve supplied to other lenders.

    When you complete an online application, most lenders will perform a soft pull on your credit and run your application through an automated underwriting program. This allows them to quickly gauge your ability to afford a loan, which they then use to offer your preapproval or deny your application.

    Find out if that preapproved loan offer you received is legit

    What do I need to submit for a preapproval application?

    If you’re ready to submit an application, be prepared to share some personal information with the lender.

    • Your name, date of birth and Social Security number
    • Your contact details, including your address, phone number and email
    • Your employment details, including your current employer and income
    • Your financial details, including your expenses and debts

    Lenders provide preapprovals based on your application. If it’s inaccurate or missing details, a lender won’t be able to offer you preapproval. Be sure to take the time to gather the necessary documents so that your application is as accurate as possible before you begin.

    How can I avoid being denied for a loan?

    Lenders may decline preapproval applications for any reason. Some common ones are

    • You haven’t supplied the proper documents for validating your income
    • You have a low credit score or don’t meet other eligibility criteria
    • You have too many inquiries on your credit report

    Unfortunately, there’s no way to avoid it besides making sure your application is accurate and reflects your ability to repay a loan. You can work on building your credit score if it’s low or pay down some other debts if your debt-to-income ratio is too high to meet a lender’s qualifications.

    Just because you’ve been preapproved before doesn’t mean you will be again. Lenders have strict eligibility criteria, and you aren’t guaranteed to receive a loan even if you’ve been preapproved.

    What to watch out for

    Always be wary of a lender’s reputation. Check customer reviews and the lender’s website, and never agree to a loan from a lender that you don’t trust. It may seem obvious, but there are scams out there that look legitimate. Some disreputable lenders will even send postcards in the mail or forward an email that mimics a real lender. Confirm that these preapproval offers are real before proceeding with a loan application.

    Bottom line

    Being preapproved for a personal loan can help you make a more informed decision about your future finances, but it can be a confusing process if you don’t know what to look out for. Remember that a preapproval offer doesn’t guarantee you a loan and that lenders will likely consider both your credit and income before extending preapproval.

    You can compare your personal loan options to find the right lender before you submit an application.

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