Tips For Getting A Personal Loan – Ultimate Guide

As the name suggests, a personal loan is a money borrowed against your own collateral. The lender assesses your ability to repay the loan by evaluating your creditworthiness and affordability. With some lenders, this process can be challenging.

However, with a little preparation and research, getting your personal loan shouldn’t be an uphill task. A personal loan can help you take control of your finances by unlocking cash from savings or other assets at a lower rate of interest than most unsecured loans such as credit cards or equity lines of credit.

Personal loans are also easier to qualify for than home equity loans because they are considered less risky for the lender. But that doesn’t mean it’s easy to get one. Here are our top tips on how to get a personal loan successfully:

Have A Plan

Before you go hunting for a personal loan, it is imperative that you have a clear financial plan in place. The lender will likely ask you for a breakdown of your monthly expenses, so you need to know your regular outgoings like the back of your hand.

Moreover, it never hurts to have a little extra cash tucked away each month just in case of an emergency. A responsible borrower is a borrower most likely to repay their loan successfully without delay.

Shop Around

When you shop around for the best personal loan, you get to choose the terms that are best for you. This means that you are in control of a crucial part of the loan application process.

When it comes to personal loans, the lender is solely interested in your ability to repay the loan on time. Therefore, there are no credit checks or minimum FICO scores for personal loans.

You can therefore shop around for the best deal without any worry about your credit history. The only thing that matters to the lender is your employment history, monthly income, and existing debt.

Know The Conditions Before Signing On The Dotted Line

The rates of interest charged by the lender vary significantly depending on the terms of the loan. In addition, every lender applies different conditions. Before you sign the dotted line, make sure you understand the full conditions of the loan.

You should confirm the following key points when applying for a personal loan:

• How much you can borrow – This can vary greatly between lenders.
• What repayment schedule you will follow – Some lenders offer monthly installments, while others have you repay the loan in one lump sum.
• The interest rate – This is the amount you will have to pay the lender for borrowing the money. The interest rate can vary greatly depending on the lender.
• The type of loan – There are many different types of personal loans out there. Make sure you understand which one you will be taking out.
• The loan fees – Personal loans often come with some fees. Make sure you understand what these are and whether you will have to pay them upfront or if they will be added to your loan balance.

Be Ready To Provide Your Employment Details

As with all loans, a personal lender will look into your employment history before deciding whether to approve your loan application. A lender will want to see that you have been employed for at least two years.

Moreover, they will want to know what your salary is and what other assets you have. You will also be required to provide details of your existing debt, such as a credit card payment that is already in arrears.

Make Sure You Understand All The Implications Of Applying For A Loan With An APR That Is Different From Your APY

While many lenders advertise loan rates in terms of the annual percentage rate (APR), they actually factor in the amount paid monthly. Therefore, many lenders also advertise the annual percentage yield (APY) instead.

Most lenders provide the APY, not the APR, to you when you apply for a personal loan. This can be confusing, as the two numbers don’t add up to be the same.

Conclusion

Finally, don’t be put off by the challenges we’ve outlined above. Personal loans are an important part of financial planning, and they can help you achieve your goals by providing you with crucial cash when you need it most.

With the right preparation, you can get the loan you need and use it to take your financial future to the next level.