A personal loan can cover expenses that can come to you unexpectedly in life. Obtaining a personal loan has been made easier than ever now that you can apply it online. Usually, the online loan you apply for is unsecured and collateral is not necessary. The following are 7 tips on how to get a personal loan.
1. Check Your Credit Score
First, you need to check your credit score to see if you qualify for personal loan financing. You can request a free credit report from one of the three credit bureaus every year. If you found any error, you can dispute it with the credit report. You don’t have to be disappointed if you have a low credit score. Instead, you can take steps to build your credit score, for example, signing up for a loan forgiveness program and making on-time payments can build up your credit score.
2. Shop Around for the Loan
Next, you can shop around for a loan with the best interest rate. The loan comparison search engine is one place where you can search for a personal loan. The requirements for every lender are different. For example, one lender may require a higher credit score while the other has a lower credit score requirement. When choosing a loan, you can look for one that offers flexible features such as the ability to choose your payment due date and the ability to defer payment when you are unemployed.
3. Get Prequalified for the Loan
From the loan comparison search engine, you can check rates and get prequalified for the loan. This is called a soft credit check. In the prequalification process, you will be required to provide much information such as social security number, income, birth date, address, etc. Some of the reasons for getting denied in the loan prequalification application are too little income, lack of work history, and debt to income ratio.
4. Submit the Necessary Documentation
If you get pre approved, you can go ahead to submit the loan application. You can attach identification, address verification, and proof of income documents. Some of the documents you need to provide are your passport, social security card, utility bill, payslip, and bank statement. When you apply for a personal loan, the lender will carry out a hard credit check.
5. Read the Fine Print
It is important to read the fine print when you are applying for a personal loan. You should check about the prepayment penalty which is a fee you pay for paying off your loan early. There are a lot of online lenders who don’t charge any prepayment penalty fee. In the fine print, you can also check whether the loan requires automatic payment. In this case, you will need to set up a low-balance alert in your checking account.
6. Accept the Loan Term
You need to finalize the loan application by accepting the terms and signing the loan documents once you have accepted the loan. The funds will be deposited into your account within 1 – 2 weeks after you have signed the documents. Some online lenders can send the funds to you in 1 – 2 days.
7. Start Making Loan Payment
You must note down the due date for every month so that you will remember to make payment. Automatic payment can be set up in your checking account. It will allow payment to be sent to the creditor without you having to manually make a payment. Paying off the loan early can help you to save money on interest fees.