Princeton,NJ/ 360prwire/ November 29/
Image source: Sharon McCutcheon
People borrow money for different purposes; rent, medical bills, tuition, and even food. Human needs and wants are insatiable, and we can all agree that our pockets happen to fail us at times. As a result, we often resort to obtaining loans from financial institutions to cover our expenses.
As the name implies, a personal loan means money borrowed for personal needs. When you obtain a personal loan from a lender, you are required to make fixed repayments throughout an agreed period, typically two to seven years. Most lenders issue loans ranging from $1,000 to $100,000
Over the last decade, more Americans applied for a personal loan than ever before, and we could point to several reasons for this. Americans’ personal loan debts have been on a steady increase since 2011 up until the third quarter of 2019.
As of today, there are 19.4 million Americans with personal loan debt. Although this data represents a decline from the previous year, it still shows how much Americans rely on personal loans.
Obtaining a personal loan has become a practice in the past decade, and it could be due to economic factors such as the Great Depression. Another reason could be that a personal loan does not require collateral. Whatever the case may be, one thing is sure: personal loans are a lifesaver.
There are many online lenders to choose from, but you must ensure that you choose the right one. CreditNinja offers access to funds in a safe and timely manner.
Getting a personal loan doesn’t have to be stressful. If you’re looking to obtain one, follow these simple steps:
Find Out About Your Credit Score
The first thing to consider before applying for a personal loan is your credit score. A credit score is a set of points that connotes your creditworthiness and determines your eligibility for a personal loan and the interest rate you’ll be getting. Generally, a low credit score will most likely get your application disqualified or subject you to a higher interest rate.
Before setting out to apply for a loan, assess your creditworthiness. Typically, Credit Bureaus and online lenders use these credit score categories to determine your eligibility:
- Excellent credit – 720 and above
- Good credit – 690 to 719
- Fair or average credit – 630 to 689
- Bad credit – 300 to 629
Delayed payment is, perhaps, the biggest factor that can affect your credit score. The good news is that you can improve a bad credit score by taking the right steps, like paying on time and not borrowing too much.
In some instances, there may be errors in your credit score report, which you can fix by filing a dispute. Ensure to do all of these before applying for a personal loan.
How Much Do You Want to Borrow? Make Up Your Mind
Decide the specific loan amount you want to obtain. Generally, a higher loan amount will accrue more interest, and fixed monthly repayments will be higher. Also, make sure you don’t borrow more money than you can repay.
Pre-qualify for a Personal Loan
Some see this as time-wasting, but the truth is pre-qualifying for a personal loan is definitely worth the time. This process lets you compare lenders and loan terms. You can save some money as you weigh your options.
Online lenders will ask for details, such as personal information (address, phone number, email, date of birth), the reason for applying for a loan, the loan amount, citizenship status, income, employer details, and work location, etc.
These checks will not affect your credit score, although they can determine whether or not you will be considered eligible. Online lenders can deny your application for different reasons, such as a low credit score or little earnings.
Do Some Comparisons
There are many online lenders and financial institutions with different offers. You will be doing yourself some good by comparing pre-qualified offers to know which one is best for you.
You should go for lenders that offer you lower interest rates and flexibility. If you have a bad credit score or you wish to apply for small loan amounts, applying for a credit union might be the way to go.
Read the Terms and Conditions Carefully
Things could get really ugly if you don’t do this. Read through the terms and conditions of the loan offer, and if you need clarity, do not hesitate to ask questions. Watch out for indices, like the prepayment and late payment penalties, automatic withdrawals, and beneficial features like flexible payments and quick credit reporting.
Apply for Personal Loan
After selecting your preferred lender, you can apply for a loan. The lender will ask you to provide some documents to assess your eligibility. The type of document to provide will depend on the lender. However, most lenders will request a valid means of identification, proof of address, and proof of income.
In summary, all you need to do to obtain a personal loan is check your credit score, get pre-qualified, compare different options, and submit a formal application. Typically, your requested funds should be available within a week.