Check your credit score
First check your credit score to assess your financial picture. You have a better chance of being approved for a personal loan and receiving a lower interest rate if your credit score is high.
- 720 and higher: Excellent credit.
- 690-719: Good credit.
- 630-689: Fair or average credit.
- 300-629: Bad credit.
If your credit score seems low, correct any mistakes that may be affecting it on your credit report. You can dispute inaccurately reported missed payments or other inaccuracies in your credit report by requesting a free copy of it.
Since these are the main things influencing your credit score, make sure you pay off your credit card debt and other loans on time and maintain a low credit utilization ratio (the amount of credit you use compared to your credit limits).
» Hows your credit? Check it for free on NerdWallet
Calculate your loan payments
Next, determine how much money you need from a loan. Make sure that sum includes any fees the lender might impose. The origination fees are normally deducted from the loan proceeds and range from 1% to 10% of the loan amount.
You can get a better idea of the annual percentage rate and potential monthly payments for a personal loan by looking at your credit score and loan amount.
The length of the loan also affects how much a loan can cost. Longer loan terms have lower monthly payments, but the total amount of interest paid will be higher.
To view estimated payments based on loan amount, rate, and term, use our personal loan calculator. The best personal loans have affordable monthly payments that you can easily afford.
Get pre-qualified for a loan
Being pre-qualified for a personal loan allows you to see what kinds of offers you might get from lenders. During pre-qualification, a soft credit check is conducted by several banks and online lenders; this check doesn’t impact your credit score.
You normally have to supply personal details like your name, date of birth, income, and loan purpose during the pre-qualification process.
When you pre-qualify with several lenders, you can evaluate projected interest rates and repayment amounts.
Take into consideration a secured or co-signed personal loan to bolster your application. You might be able to qualify for a lower rate if you put collateral—such as an asset or someone with excellent credit—down. Keep in mind that if you don’t repay, there are repercussions for the co-applicant or collateral in both cases.
Compare lenders and shop around
Banks, credit unions, and internet lenders all offer personal loans. Comparing loan amounts, monthly payments, and interest rates from various lenders is a smart idea.
- Online lenders let you pre-qualify, apply and receive funds online. Borrowers with a range of credit scores can get quick funding and loans from lenders like SoFi, Happy Money, and Best Egg.
- Unsecured personal loans are available from banks like PNC, Discover, and Wells Fargo. Current account holders may be eligible for flexible loan terms and rate breaks. Look for offers from your current bank if your credit is good to excellent.
- Particularly for borrowers with poor credit, credit unions may provide more flexible terms and lower interest rates. They’re also your best option for loans that aren’t larger than $2,000. To apply for a loan, you must be a member of the credit union. You should also be prepared for a hard pull on your application, which could lower your credit score.
Read the fine print
Read the terms carefully and get answers to any questions you have before signing a loan. In particular, watch for:
Fees. Although early loan payback penalties are uncommon, lenders may still impose origination and late payment fees in addition to other costs.
Automatic withdrawals. Consider establishing a low-balance alert with your bank if your lender deducts loan payments automatically from your checking account in order to prevent overdraft fees.
APR surprises. The APR should accurately reflect and include the entire cost of your loan, including interest and any origination fees.
Additionally, search for lenders that provide loan features that are advantageous to consumers, such as the ability to modify payment dates, report payments to the three major credit bureaus, or send borrowed funds directly to creditors for debt consolidation loans.
Complete your application
After determining which lender best suits your requirements, you can formally apply for the loan. Application requirements may vary by lender, but you’ll likely need:
- Identity documents such as a Social Security card, passport, driver’s license, or state ID
- Verification of address: Utility bills or lease agreement.
- Proof of income: Pay stubs, bank statements or tax returns.
The lender will perform a hard credit check, which could result in a brief drop in your credit score and remain on file for 24 months on credit reports. You will receive your loan in accordance with the terms specified by the lender after final approval, usually in a week. Once you have the money, arrange how you will manage the payments on your personal loans and pay off your loan.
FAQ
How hard is it to get a $5,000 personal loan?
$5,000 personal loans are available online from a number of lenders, some of which offer fast approval. Although each lender has different requirements for eligibility, you will have the best chance of being approved if you have a steady income and a good credit score of 670 or above.
Are personal loans easy to get approved?
When personal loans have flexible income and credit score requirements, they are easier to obtain. Although the best personal loan providers typically require a high credit score—typically between 600 and 680—some—like the ones on this list—accept scores as low as 560.
Read More :
https://www.nerdwallet.com/article/loans/personal-loans/how-to-get-a-personal-loan
https://www.bankrate.com/loans/personal-loans/how-to-get-personal-loan/