Where To Get A Personal Loan
You dont have to step into a brick-and-mortar bank to apply for a personal loan there are many online lenders offering competitive terms and rates.
In addition to banks, the two main types of lenders likely to offer a personal loan are credit unions and online lenders. Whether youre applying for a loan online or in person, each lender has their pros and cons, and looks for something different in the application process.
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What Do I Need For Personal Loan Prequalification
Expect to be asked for basics like:
- Borrowing purpose
- Citizenship status or Social Security number
- Whether youre applying with a co-borrower
LendingTrees personal loan marketplace allows eligible borrowers to compare multiple loan offers using just one form. See if you prequalify by clicking the button below.
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What Happens If You Cant Pay Back A Personal Loan On Time
Before you take out a personal loan, you should consider your situation and your ability to pay it back.
There can be serious consequences if you dont make your loan payment by the due date:
- your lender can request that you pay the full amount of the loan at once
- your lender might have the right to take something that you own, such as your car, if you have a secured loan
- your lender can report a missed payment to the credit bureaus, which could mean it will show up on your credit history and could hurt your ability to get credit in the future
- your lender will usually charge you a non-sufficient funds fee if you dont have enough money in your account to cover a payment that is supposed to be paid with a pre-authorized debit
- your lender could sue you for the debt
Act quickly if you are having trouble making repayments. If you cant make the full repayment, pay what you can. Contact your lender without delay.
How To Apply For Personal Loans
Before applying for a personal loan, there are several documents you should have ready for lenders. Each lender may require additional or different documents.
- Your employment status or proof of regular income
- A government-issued I.D.
- Social Insurance Number and date of birth
- Your permanent address, phone number, and email accounts
- Bank account that accepts automatic deposits
Lenders will generally check your credit report and credit scores, along with other information to evaluate your ability to repay the loan. This can impact your available loan options and terms, such as interest rates.
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I Already Have A Personal Loan Can I Get Another
That depends on several factors, but most likely you can. Lenders will re-assess your creditworthiness, so your payment history on your current personal loan, any changes to your credit report, and any increase or decrease in your income and expenses would impact your ability to get another loan. Also, your current personal loan will be taken into account when lenders assess your debt to income ratio to determine if too much of your income is going towards paying debt. If you have been making on-time payments on your loan, its likely your credit score has improved and your rate may be lower on a new loan.
Gather Your Documents And Formally Apply
Once youve settled on a loan offer, youll need to formally apply through the lender. This requires a hard credit check, which will impact your credit score, so its good to file formal applications within a brief period.
However, hard credit inquiries arent necessarily a bad thing. A hard credit inquiry only lasts on your credit report for two years, and it will only affect your credit score for one year, typically. Still, its best to do your research and see if you prequalify for a loan to avoid unnecessary hard inquiries.
Once the lender has all of the information and documents they need to make a decision, your loan will typically be approved or denied on the same day you apply.
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What If I Dont Get Approved
If you dont get approved for your personal loan, you still have a few options:
What Do I Need To Pre
To pre-qualify, youll need to provide information such as:
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Loan purpose.Unsecured personal loans can be used for almost anything.
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Requested loan amount. Lenders typically offer personal loans from $1,000 to $50,000.
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Preferred monthly payment. Personal loans usually have monthly payments spread over two- to seven-year terms.
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Personal and financial information. This could include your name, email address, date of birth, address, income, Social Security number and education.
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Know The Steps To Getting The Cash You Seek At The Best Possible Rate
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A personal loan is money you borrow for just about any purpose, including debt consolidation, an unexpected medical bill, a new appliance, a vacation, or even a student loan. You pay the money backincluding interestin monthly installments over time, usually two to five years, Most personal loans are unsecured, meaning they are not backed by collateral.
The interest you pay is expressed as an annual percentage rate . The average APR on a personal loan is 9.41% as of June 2019, but it can range from 6% to 36% depending on your , including an examination of your income, debts, and .
Secured Vs Unsecured Personal Loans
Understanding the differences between these two types of loans is critical as you decide your goals and shop for rates.
A secured loan will usually give you lower interest rates, but you have to put something up as collateral. If you dont pay back the loan, they take your collateral. While unsecured loans dont require any collateral, they will have higher interest rates.
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Why Do I Need A Good Credit Score For A Personal Loan
When applying for a personal loan, or any other type of credit, a good credit score can mean a greater range of choice for you in terms of lenders and loan offers, and more attractive borrowing terms .
Credit scores represent your history with credit as recorded in your credit reports, and give lenders a sense of how experienced and responsible you are in handling debt. Higher credit scores correlate with lower likelihood of failing to repay debts, so lenders consider it riskier to lend money to borrowers with low credit scores than to those with high ones. They typically offer their best deals on loans and credit to borrowers with high credit scores. Lenders usually charge more to borrowers with lower scores to offset their greater chances of loan default, and if an applicant’s credit score is too low, might not even offer them credit at all.
Each of your credit scores reflects the information in your credit file at each of the three national credit bureaus , as analyzed by a credit scoring system such as the FICO® Score or VantageScore® model. While their specific calculations are highly guarded trade secrets, all credit scoring systems are broadly responsive to the same basic set of factors:
How To Compare Loan Options
It can be difficult to compare options for personal loans without knowing the total cost of the loan. You can calculate the total cost of the loan by multiplying the payment amount by the number of payments in your term.
Suppose you want to get a personal loan for $2,000. Assume the interest rate is 19.99% on a monthly payment plan. You may be offered various monthly payment options, which include interest and other fees.
For example, you have the following monthly payment options:
- option 1: $185 per month for 12 months
- option 2: $75 per month for 36 months
- option 3: $53 per month for 60 months
Lenders may extend the duration of the loan to lower your monthly payment. This comes at a cost because youll pay more interest over time. When you compare the total cost of the loan, its easier to know which option is best for you.
Table 1: Example of the total cost of personal loan with different terms| Option | |
|---|---|
| 60 | $3,180 |
Table 1 shows the longer you take to pay off your loan, the more expensive it will be. The amounts are approximate and have been rounded to the nearest dollar.
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Ready To Shop For A Personal Loan
Taking on a personal loan will depend on your specific needs. Consider whether youll be able to afford the payments and whether the loan is necessary.
If you decide that a personal loan is the option for you, make sure you shop around to find the best deal. Youll want to know the specifics, such as the , interest rate, what your monthly payments will look like and the time itll take to pay off. Dont overlook the fine print, either. Youll want to know if there are any prepayment penalties, late fees or other fees to get a loan in the first place.
Whatever your financial needs, Rocket Loans is here to help. Tell us what you need and we’ll help you find the perfect loan for you.
Research Lenders And Apply For Prequalification
Make sure you shop around for the right lender for you, whether its a traditional financial institution like a bank, a credit union or an online lender. Depending on your overall financial health, you may discover you are eligible to borrow more funds with some lenders, pay better APRs or benefit from longer terms in which to repay your loan.
As member-owned institutions, credit unions may be more forgiving of borrowers with dings on their credit. Online lenders, meanwhile, may offer lower interest rates as they have lower overhead costs. The flipside is that these lenders may not offer the same lending experience as traditional lenders, where you have the option of face-to-face interaction with your loan officer.
The prequalification process is a quick, convenient way to compare lenders online based on your credit profile, without affecting your score since only a soft pull is placed on your history. When applying for prequalification, expect to provide basic information such as:
- Name
- Requested loan amount and purpose
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What Kind Of Credit Score Do You Need To Get A Personal Loan
While it depends largely on the lender, the minimum credit score youll need to get a personal loan usually falls anywhere between 600 and 700. Generally speaking, the higher your score, the better your chances of approval, as well as the most competitive rates and terms. Lenders will also consider your debt history.
If you have fair or average credit, itll be tougher for you to get approved. A credit score is a major part of determining your creditworthiness, but it doesnt show lenders your entire financial profile. Your income gets considered, as well as your employment history in some cases. Additional documents may be needed if youre self-employed or if you own your own business.
Common Personal Loan Requirements
Because personal loans are not secured by an asset like a car or a house, they may be more difficult to qualify for and involve higher interest rates than other types of loans. The lender doesnt have the ability to seize and sell your property to cover the cost of your loan if you cant pay it back. As a result, they may set out more comprehensive requirements to ensure you have a solid credit history.
While eligibility criteria may vary from lender to lender, here are some of the most common personal loan requirements:
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How Do You Qualify For A $100000 Personal Loan
To qualify for a $100,000 personal loan, make sure you have a strong credit profile and present a low level of risk to the lender. In general, a qualified applicant for a large loan has a FICO credit score of at least 720. However, prospective borrowers with a score of 750 or higher are more likely to qualify for the best rates.
Qualified applicants should also demonstrate stable employment and an income large enough to comfortably cover loan payments and other debt services. Lenders will look at your income when determining whether you qualify.
Consider Different Types Of Personal Loans
As youre checking your credit report and improving your credit score, begin thinking about the type of personal loan that will best suit your needs. You might compare unsecured and secured loans, for example, before ruling one out. Most borrowers will prefer unsecured loans to avoid posting collateral, but unsecured loans require stronger credit histories.
If you decide on an unsecured loan, youll notice that lenders advertise different types. Consider the following:
These are all personal loans per se, but how you plan to employ the funds could affect your choice of lender. If youre borrowing to consolidate credit card debt, for example, you might opt to work with a lender like Payoff that specializes in refinancing credit card balances.
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How Much Will A Bank Give Me For A Personal Loan
In terms of how much you can get for a personal loan, different lenders banks, credit unions and online lending companies have their own criteria for creditworthiness.
Different lenders will require different , and will consider other factors such as your income. Keep in mind, however, that if the minimum requirement for a credit score is lower, other factors might be weighted more heavily, such as your employment history, education or income.
Youll want to do your research and check the lending requirements for a bank, credit union or lending company before committing to your lender.
What If You Dont Get Approved For Your Loan
If you dont get approved for a personal loan, there are a couple of other options to consider:
- Get a cosigner: A cosigner adds their name to your loan application. They agree to pay off the loan plus any additional fees in the event you default. If you have a trustworthy friend or family member with good or excellent credit, they may help you get approved for a cosigned loan. Note that your cosigner will likely need to provide the same documents as you when you both apply for the loan. If you go this route, make sure you repay it on time to avoid damaging your relationship.
- Choose a secured personal loan: Most personal loans are unsecured, meaning they dont require collateral like your house or car. Secured personal loans, on the other hand, are backed by collateral. If you fail to repay your loan, the lender may seize your collateral. By applying for a secured personal loan, you can reduce the lenders risk and therefore increase your chances of approval. Keep in mind youll have to show documentation proving the value of the collateral and the fact you own it.
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