How to apply for a personal loan
If you’re thinking about taking out a personal loan, here’s what you need to know about how to apply.
First, make sure you understand the basics of personal loans. Personal loans are typically unsecured, which means they’re not backed by collateral like a home or car. That means they’re a bit riskier for lenders, so the interest rates on personal loans are usually higher than for secured loans like mortgages or auto loans.
That said, personal loans can be a great way to finance a big purchase or consolidate high-interest debt. And because they’re unsecured, you don’t have to put up your home or car as collateral.
Here’s what you need to know about how to apply for a personal loan:
- Shop around for the best rates and terms.
Personal loan rates and terms can vary widely from lender to lender, so it’s important to shop around for the best deal. Use an online lending marketplace like Credible to compare rates from multiple lenders in minutes.
- Check your credit score and history.
Your credit score is one of the factors that will determine whether you qualify for a personal loan and what interest rate you’ll pay. Check your credit score for free on sites like Credit Karma and Credit Sesame to see where you stand. If your score is on the lower end, you may still be able to qualify for a $700 payday loan but you may have to pay a higher interest rate.
- Gather the required documents.
When you’re ready to apply for a personal loan, most lenders will require some basic information including your name, address, date of birth, Social Security number, and income information. You’ll also need to provide some details about why you’re taking out the loan and how you plan to use the funds. Most lenders will also require you to submit documentation like bank statements or pay stubs to verify your income.
- Read the fine print.
Before you sign on the dotted line, make sure you understand all the terms of your personal loan agreement. Pay close attention to the interest rate, repayment terms, and any fees or charges associated with the loan. If anything looks unclear or doesn’t make sense, ask questions until you get clarity from the lender. And remember, just because you’re approved for a loan doesn’t mean you have to take it – if the terms aren’t favorable, don’t be afraid to walk away from the deal.
Why you should get a personal loan
There are many benefits to taking out a personal loan, including the ability to consolidate debt, make home improvements, or fund a large purchase. If you’re considering a personal loan, here are four reasons why you should go for it.
- You can use a personal loan for anything Unlike other types of loans that are designated for a specific purpose – like a mortgage or an auto loan – a personal loan can be used for anything you want. That means if you have multiple debts with high interest rates, you can consolidate those debts into one monthly payment with a lower interest rate by taking out a personal loan. Or, if you need to make some home improvements but don’t have the cash on hand, a personal loan can be a great way to finance those projects.
- Personal loans have fixed interest rates Another benefit of personal loans is that they generally have fixed interest rates. That means your monthly payments will stay the same for the life of the loan, which can make budgeting and planning easier. And, if you’re able to get a personal loan with a lower interest rate than the rates you’re currently paying on your debts, you can save money in the long run by consolidating those debts into one personal loan.
- You can get a personal loan with bad credit If you have bad credit, you may think that you won’t be able to qualify for a personal loan. But there are plenty of lenders who offer personal loans to people with less-than-perfect credit. And because personal loans are often unsecured – meaning they don’t require collateral like a car or home – they can be easier to qualify for than other types of loans.
- Personal loans can help improve your credit score If you make your payments on time and in full each month, taking out a personal loan and paying it back as agreed can actually help improve your credit score over time. That’s because timely payments on installment loans (like personal loans) are reported to the credit bureaus and can help build positive credit history. So if you’re looking for a way to improve your credit score, getting a personal loan and making your payments on time could be a good strategy.
What to do if you can’t repay your personal loan
If you find yourself in a situation where you can’t repay your personal loan, don’t panic. There are a few things you can do to help ease the situation.
First, contact your lender as soon as possible. They may be able to work with you to come up with a new repayment plan that works better for your current financial situation.
Secondly, consider consolidating your loans. This can help you get a lower interest rate and make it easier to make one monthly payment.
Lastly, if all else fails, you may need to consider declaring bankruptcy. This should be a last resort option, but it may be the only way to get out of debt.
If you’re struggling to repay your personal loan, remember that you’re not alone. There are options available to help you get back on track.
What to do if you can’t repay your personal loan
If you’re struggling to repay your personal loan, don’t panic. There are a few things you can do to get back on track.
First, talk to your lender. They may be able to work with you to create a new repayment plan that fits your budget.
Second, consider consolidating your loans. This can help you get a lower interest rate and make it easier to manage your monthly payments.
Third, use any extra money you have to make extra payments on your loan. Even if you can only afford a little bit extra each month, it will help reduce the amount of interest you owe and shorten the overall repayment period.
If you’re still struggling to repay your loan after taking these steps, you may need to consider other options, such as selling assets or borrowing from family or friends. Whatever you do, don’t just ignore the problem. That will only make it worse.