Where can I get a personal loan

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If you find yourself in a situation where you would like to pay down your credit card debt, finance a move or take that trip you always wanted, taking out a personal loan is a good way to do that and not leave yourself overwhelmed with debt as a result. Are you asking yourself “Where Can I Get A Personal Loan” – well, this is the right article for you!

In most cases, personal loans are unsecured loans. They don’t require any personal property to be put up as collateral. The standard personal loan amount can be anywhere between $1000 and $50,000. These loans are typically required to be paid back over a 2 to 5 year period.

The better your credit score the more choices you will have among lenders and the better your personal loan interest rate will most likely be. The exact opposite is true if you have poor or bad credit. Lenders do have some leeway and sometimes can consider other things besides just your credit score.

Here is a step by step guide:

1. Know your credit score

The stronger your credit score the more likely you are to get a personal loan approved. It will also impact your personal loans interest rate. You can check your creditworthiness by obtaining a free credit score on the internet.

Here are the usual categories that credit scores fall into:

720+: Outstanding credit

690-719: Very Good credit

630-689: Fair to average credit

300-629: Poor Credit – You are deemed a credit risk

If your credit score needs building up before you apply for a personal loan there are some things you can do. Make any existing loan and credit card payments on-time and try not to max out existing credit limits on loans and credit card. Be sure to dispute any errors you find in your free credit report too.

2. Try pre-qualifying for a loan

Many times you can go online and find a personal finance website like Nerd Wallet that will let you pre-qualify for a personal loan. During the pre-qualification process a lender will do what is known as a ‘soft credit check’ that does not impact your credit score by doing it.

Typically questions you will be asked when trying to prequalify for a loan are the following:

  • Social Security Number
  • Current Income
  • Current debt percentage
  • Current employer information
  • Previous home addresses
  • Birth Date
  • Mom’s maiden name
  • College education

Of course not everyone will be able to pass the loan prequalification process. Reasons for this often include:

  • Insufficient income
  • No or Incomplete work history
  • A large debt-to-income ratio ( a figure here below 20% is considered to be ideal)
  • A lot of recent credit card applications or other credit inquiries

3. Look around for different personal loans

Once you pre-qualify for several different types of personal loans you must compare them to each other. Look specifically at the amount of the loans, interest rate and time period in months to pay them back. NerdWallet tends to recommend choosing credit unions and banks as personal loan lending sources too. Credit Unions will offer you the best chance at getting a loan if you have bad credit and usually offer lower interest rates too. This is especially true with lower amount personal loans under $2500.

Most large lending institutions do not allow customers to take out unsecured personal loans. Exceptions to this are Citibank, Wells Fargo and Discover. Credit unions, such as Navy Federal, or smaller locally owned banks may offer even better interest terms if you have a pre-existing banking relationship with them. Specialized lenders, such as Opploans app, also focus on customers with less-than-perfect credit.

4. Compare your current loan offers against other credit options

Before you agree to take out a personal loan make sure you:

  • Inquire as to whether or not you are able to take out a credit card that has 0% interest for the first year. This makes your loan cheaper to pay back if you can do that in a year or less.
  • Take the time to see if a secured loan is a better option for you because it offers a much lower interest rate.
  • Do the same with a home equity line of credit if you own your own home. This can sometimes be a much cheaper option than an unsecured loan.
  • If you are turned down for a personal loan see if having someone cosign it with you will get it approved. They will determine this by looking at you and your cosigner’s credit history. You may even get a better interest rate this way.

5. Make sure you look at the fine print

Before you sign your loan on the dotted line make sure you understand the monetary aspects of it and any associated terms.

Of particular interest should be:

  • Prepayment penalties. Make sure there are no fees for paying off your personal loan ahead of time.
  • Automatic payment debits. If you are required to do this option, set up a low balance alert with your bank to help avoid high overdraft fees.
  • Annual Percentage Rate Surprises. The paperwork for your loan should explicitly state the bottom line cost of your loan including interest rates and fees.

Here are some loan features that can benefit you greatly:

  • Payment reporting to a credit bureau. This can help improve your credit rate.
  • Flexible payment options (choose the day of the month you pay, the option to skip a payment, etc.).
  • Lender’s ability to send borrowed funds directly to a creditor. This is very helpful if your loan is being used for debt consolidation.

6. Upon approval

Once you have decided which lender whose loan offer you will accept you will need to present to them the following documents.

  • Valid ID – driver’s license, passport, state ID or SS card
  • Present proof of address (utility bill, lease, etc.)
  • Proof of income. W-2 form, bank statements, payroll check stubs, copies of tax returns

Your loan lender will also run a hard credit check that will impact your credit score very slightly. Upon your loans final approval you will usually have your funds within a week.

Taking out a personal loan is a very good idea if you are currently overburdened by debt or have has a big unexpected expense come your way. Just make sure you thoroughly check around to find the lowest interest rates and even more importantly only borrow what you absolutely need. Make sure you make your loan payments on-time too.

How to get a personal loan with bad credit

If you need a loan now with bad credit, you will need to do a few things. First, determine the amount that you need to borrow. Depending on that amount, some borrowers are a better fit than others. In general, having a bad credit means that you will probably have to pay a high interest rate. But it doesn’t have to be like this all the time. Apps like Dave or apps like earnin can provide you with small cash advances with no fees.

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