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A personal loan is a handy tool to cover any large expense. Before you apply, learn what you’ll need to complete an application and increase your chances of approval.
Before you start on the loan process, confirm what type of loan you need. Personal loans are generally unsecured, meaning they use your credit as a gauge rather than an asset like your house or car. If you need a larger loan or need an open source of credit, you may want to consider other financing options.
The amount you borrow should be based on the expense you’re trying to cover and your income. It’s better to determine how much you can spend each month and borrow less than your maximum so you can avoid stretching yourself too thin.
Taking out a loan that’s too small can leave you with remaining financial needs, but if you take out a loan that’s too large, you’ll be stuck paying interest on a larger amount than necessary. This is why you should carefully calculate the debt you can handle and the amount of your purchase before you apply.
There are a wide range of personal loan types that are appropriate for different borrowers. Common types of personal loans include:
While these are the most common, personal loans are generally available for almost any purpose. Check with your lender to see if it has any restrictions on how you use your funds.
Banks and credit unions tend to offer a more hands-on experience. Current customers might also get discounted rates. But they typically take much longer to process your application than online lenders. They also require more documents and the application itself can be more complicated.
Consider what you value the most when deciding where to start your search: assistance or speed.
Your credit will determine how much you qualify to borrow. The better your score, the better your chance to be approved for the loan amount you want at a competitive rate.
While systems vary, FICO breaks down credit scores into four categories:
Most lenders will require good credit and at least one year of credit before they offer you an unsecured loan, so check your credit score with before you apply for a personal loan.
Don’t waste time applying for a loan that you’re ineligible for. Before you consider a lender, check their eligibility requirements. Typical requirements include:
Don’t hesitate to shop around and compare lenders. Check interest rates, fees, loan terms and payment options before signing any documents. And to stay safe, read the lender’s fine print before you fill out an application. Certain fees — like prepayment penalties or late fees — may not be listed until after you apply.
You should also be on the lookout for red flags that could indicate a scam. You’ll want to make sure your lender is registered in your state and has plenty of business information available so you can rest assured you aren’t giving your banking details to a fake company.
Having the required documents on hand can make your application go a lot faster — the sooner you can get them in, the sooner you can get approved. Ask your lender which documents it requires before you get started. Typically it includes:
Many lenders, including banks and credit unions, offer preapproval. This gives you a chance to view your potential rate and loan term based on the information you submit. It also gives you an easier way to compare: You can stack multiple offers against each other to find the best option before your credit score takes a hit.
Just remember that a preappoval offer isn’t finalized. Your lender may change your loan terms after doing a hard pull on your credit.
The application process may vary slightly from lender to lender, but generally they all follow a format similar to the one above.
Unlike when you apply for a credit card, you don’t have to accept a personal loan you’re offered. Take the time to read through the loan contract and review the rates and terms to make sure it’s the right fit for your needs before signing on.
If you do decide to take out the loan, many lenders and banks require that you have a checking account to receive your funds via direct deposit, but that’s not always the only option. Some lenders will be able to send you a check — if this is important to you, ask your lender how it transfers funds.
In most cases, you are free to spend your loan funds on whatever you’d like, with the exception of college expenses. If you took out a loan for something specific, like buying a car or consolidating debt, you should spend your loan funds on that.
It’s very important to make your payments on time so you don’t end up paying extra in fees or hurting your credit. Be sure to verify how you’ll need to make repayments. Can you pay by phone with a credit card or account number, online through the lender’s website or by mailing a check? Is there an automatic payment option? These will impact which lender you choose and how you’ll pay off your debt.
Borrowing isn’t always the right option. If you’re not ready to commit to a loan — or still need to build your credit — consider these three alternatives:
Applying for a personal loan isn’t difficult if you prepare. And to get the best deal, learn more about personal loans so you can spot a lender that will meet your needs.
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Have you ever lied to your S.O. about your finances?
I would need a 8,000. For a consultation loan. If nestle I do have a co-signer .
Hi Mark,
Thanks for your inquiry
If you think you meet the eligibility requirements, you can apply for a loan without a co-signer. However, if you think you don’t meet them you may need a co-signer to help you repay the loan if you default.
Hope this information helps
Cheers,
Arnold