You need or want to borrow money, but you aren’t sure how to start or where to look. After all, there are many options available to you and you do not want to waste time looking all over the place. Our handy guide here will show you the way. Read on and learn about the most important matters concerning personal loans.
1. How much do you need? You should have an amount in mind before you approach a banker. Specifically, if you have your eye on a used car that costs $5,000, then that amount is what you should ask. Avoid requesting more money than what you need as there is a greater chance you will be turned down and your monthly payments will be unaffordable.
2. What are your costs? A lender may charge you a loan application fee. If that is the case, consider this cost when borrowing money. Other costs involve interest and in some cases an annual fee to service your loan. Know what these are before applying for a personal loan.
3. Visit your credit reports. Obtain all three copies of your credit reports and review them. Visit AnnualCreditReport.com to get your copies — they are free as long as you order no more than one of each in a particular year. Review your reports and correct any problems before applying for a loan.
4. Obtain your credit score. Your three-digit credit score carries great weight. Specifically, it is the same score creditors use to determine whether you will be loaned money and at what interest rate. A low score usually follows problems on your credit report. Endeavor to know your score and how best to raise it before applying for a personal loan.
5. Know your options. There are many places you can look for a personal loan. Your current bank or credit union are logical first stops to make. You can also check with other banks, credit unions and financing companies. Some people prefer to use a site such as Prosper.com to borrow money from their peers. Explore each of your options and as mentioned in the second point, know your costs.
6. Unsecured or secured loans. Two types of personal loans are usually offered by lenders: secured and unsecured. With a secured loan, you can borrow money by putting something of value up as collateral, such as stocks, bonds or a house. With an unsecured loan, no collateral is needed. What you should know is that a secured loan is easier to get and loan terms are more favorable too.
7. Supply your documentation. Even as you begin to apply for personal loan, you need to get your documents together. Lenders will review your last tax return and will require two or three of your most recent pay stubs. Your lender will explain to you what other documents are needed, therefore gather this information together quickly to avoid slowing down the loan review process explains InstaLoan.com.
Now that you are ready to apply for a loan, take your time filling out the application. Carefully answer the questions and explain various points that the lender may ask. Before you submit your application, verify that the information is correct. Once you are confident that everything is in place, then make your submission.