
What is a Personal Loan?
A personal loan is a large amount of money that you borrow and pay back in monthly installments. Banks or credit unions offer loans with different requirements. Personal loans may be secured or unsecured.
Secured loans require you to offer collateral (an asset) which the lender can seize if you can’t service the debt. However, in unsecured loans, there is no collateral. But if you default on payments, it will negatively affect your credit score, and the lender may file a lawsuit against you.
If approved for a loan, the lender deposits a lump sum of the approved amount in your account. Generally, you are required to pay back the loan at an agreed interest rate over a set period. This payment period can be from six months to seven years.
Applying for a Personal Loan: What to Do First
When applying for a personal loan, you need to gather documents and perform several checks to see if you qualify.
Review Your Budget
Study your monthly spending and see if you have money available to service the debt. See where you can cut back on spending and free up money to pay the monthly installments. Make sure you can cover your bills first before taking out a loan.
Evaluate Existing Debt
One thing banks don’t like to see is too much existing debt. Whether you have student loans, a car payment, or another type of debt, it can be beneficial to pay those down as much as possible before applying for an additional loan.
Check Your Credit Score & Report
Your credit score is the key to receiving a personal loan. A good credit score can indicate how much interest you will pay and the size of the loan. Lenders study your credit history and compare it with your income.
Your credit score is impacted by various factors, including whether or not you were able to pay off previous debts on time, your spending habits, and your current outstanding debt. Most lenders will approve loans with a credit score above 640, but higher scores may earn you lower interest rates during the repayment term.
Understand How Much You Need
When applying for a personal loan, evaluate your financial situation to determine the appropriate amount to borrow. You should also look at your current debts and other financial obligations to ensure that you will be able to make the monthly loan payments. Depending on your credit score, you may be able to take out a higher loan at a lower rate.
Get Organized
Lenders require several different documents for the loan application. While the exact paperwork may vary by lender, most will require the following as part of your application:
- Personal Identification (driver’s licenses, ID card, passport)
- Income verification such as payslips and bank statements
- Proof of address
- Tax returns
- The reason for the loan and the amount
- Get your credit score done first to know where you stand
Conclusion
Getting a personal loan can be used to accommodate unforeseen expenses or to make big purchases. Properly evaluating your finances can help you determine if you’re able to take out a personal loan — and how much debt you can afford to take on. Do your homework, prepare the proper documentation, and shop around for the best rates. Taking the appropriate steps can ensure that your personal loan application experience goes as smoothly as possible.
I need a vehicle so I can start my treatments and make doc. Appt.
Hi William. Sounds like you could benefit from checking out our latest blog post on car loans.
Best of Luck,
The AssessmentOption Team
I need a loan because my bank accounts were compromised and while waiting for them to get straightened out. I have nothing to sustain me.
Hi Gregory. Thanks for reaching out. Lenders with LoanAssist-USA, NewDayLoans, or Citrus–Loans offer loans up to $20,000. Be sure to check them out!
Best of Luck,
The AssessmentOption Team
Dear Sir, im only looking for a small loan between $500 & $1,000. I don’t have a checking account or a savings. My credit is not good. I’m tired of loan company’s getting my hopes up. I don’t have a checking & savings account because I was scammed of all of my money. I’m on social security disability and I’m looking for someone to help me & “SERIOUSLY” not scam me. My credit is not good, could you PLEASE help me.
Hi Christina. Thanks for reaching out. Lenders with LoanAssist-USA, NewDayLoans, or Citrus–Loans offer loans starting as low as $100. Sounds like they would be a good fit for you!
Best of Luck,
The AssessmentOption Team
I would like a Loan for now thank you
Arnold, we recommend visiting LoanAssist-USA or NewDayLoans to apply for the loan you seek. Hope this helps!
I have had 2 toe amputations and need financial help
Hi Kristi. We suggest checking out LoanAssist-USA and NewDayLoans for financial assistance. We hope they can help!
The AssessmentOption Team
Yes i have been seeking a loan for emergency reasons and ti pay a few bills. Dont know yhat Im gonna do. Can you help
Hi Pamela. You can apply for a loan for emergency use with LoanAssist-USA. They offer loans up to $20,000. We hope you get the funds you need!
Best of Luck,
The AssessmentOption Team