Whether you need to fund a home renovation project, pay for unforeseen expenses, or consolidate debt, a personal loan could help you access a large sum of money at a comparatively low-interest rate. Since there are many lenders that offer personal loans, you are not likely to face a dearth of choices. However, getting a personal loan at the best possible interest rate and terms will require you to put in some extra time and research. Here’s what you should do to get a personal loan.
Step 1: Check if You Can Afford a Loan
You don’t want to apply for a loan only to be rejected, which is why it’s important to run the number beforehand to know whether you will be able to afford the loan. There are numerous personal loan calculators online, through which you will be able to calculate your monthly payment.
Step 2: Check Your Credit Score
Lenders check your credit score to assess your repayment ability. If your credit score is low, your application may be rejected or you may have to pay a high-interest rate. Given this, before you apply for a personal loan, make sure to check your credit score.
Step 3: Research Your Options
Conventional banks, online banks, and credit unions, among other financial institutions, offer personal loans. So, it’s a good idea to compare the different options and choose a loan that has competitive rates.
Step 4: Apply for Pre-Qualification
Once you receive a few different loan offers, it’s smart to apply for pre-qualification. Once you are pre-qualified for a loan, you will know the interest rate that you will be charged, the loan term, the loan amount you can borrow, etc. Knowing these factors will help you choose the right type of loan.
Step 5: Submit the Required Documentation
As the last step, once you select a particular loan, you will need to complete the application process by submitting the required documentation to the lender.
Once your loan application is approved, the loan amount will be credited to your bank account, typically within a week’s time. Remember to make your monthly payments on time to keep your credit score from dipping.
