How do you prequalify for a personal loan?


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Many lenders allow you to get prequalified quotes and compare them before applying. (iStock)

Personal loans are among the most versatile forms of debt as you can use personal loan funds for almost anything. They are also available to consumers across the credit spectrum, although loan terms will be significantly better for those with good and excellent credit.

For the most part, the application process personal loan loan is not time consuming and you can often get a response – and possibly even funding – within a day or two of your application. But it’s a good idea to get a personal loan prequalification before applying for a loan to make sure you get the best deal.

Here are some quick and easy steps to help you get pre-qualified for a personal loan:

  1. Get your credit in top shape
  2. Determine how much you need to borrow
  3. Look around and compare lenders
  4. Make sure all documents are prepared
  5. Please consider all options before signing up

Step 1: Make sure your credit is in top shape

If you are in a situation where you emergency funds, you may not have time to improve your credit. But if your money needs aren’t immediate, it may be a good idea to take some time to build your credit to improve your chances of scoring a lower interest.

Start by checking your credit score to see where you stand and getting a copy of your credit report to see what areas you may need to address. Other ideas include:

  • Stay behind with delinquent payments and make it a priority to pay on time every month in the future.
  • Pay off credit card debt.
  • Avoid unnecessarily applying for a new credit.
  • Dispute inaccurate or dishonest information about your credit reports.

As you review your credit report, you’ll find more specific information about how to work on your credit history. If you are sure of your credit score, then consider using Credible to view your prequalified fares in two minutes. It is free to use and there are no hidden costs.

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Step 2: Determine how much you need to borrow

Every situation is different, but it’s a good idea to know exactly how much money you need so you can avoid borrowing too little or too much.

Whether you plan to use the money to consolidate credit card debt, make some home improvements, cover emergency expenses, or whatever, think carefully about how much money you need.

You should also keep in mind that some personal loan lenders charge a startup fee, which is deducted from your loan payout. As a result, you may need to borrow more than you need for the fee.

Depending on how much you plan to borrow, you can purchase an online personal loan calculator to help you understand what it might cost.

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Step 3: Look around and compare lenders

Many lenders allow you to prequalify for personal loans through their websites. With this process, the lender performs a soft credit check, which will not affect your credit score.

Rather than visit each lender’s website individually to complete this process, online marketplaces like Credible allow you to shop around and compare multiple lenders in one place. You can view and compare personal loans, including interest rates, repayment terms, monthly payments and more based on your credit profile.

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Step 4: Make sure all documents are prepared

Once you have found the best offer for you, you can proceed to apply for a loan. Each lender has different requirements for what you need to apply for a personal loan, so check the lender’s website for specific information.

In general, however, you may need to submit several documents, including:

  • Income information, such as a pay slip, W-2 form, tax returns, or bank statements.
  • Information on how to verify your employment.
  • A copy of your driver’s license or other government-issued photo ID.
  • Proof of residence, such as a rental agreement, bank statement or utility bill.

Some lenders may also ask a series of questions to verify your identity and prevent possible fraud.

If you know how much you need to borrow and the lender charges start-up costs, include that in your desired loan amount. For example, if you plan to borrow $10,000 and the lender charges a 5% startup fee, divide the $10,000 loan amount by 0.95 to find out how much you would need to borrow to get a $10,000 payout. retained after the fee has been paid. from.

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Step 5: Consider all options before signing up

Personal loans can be used for a variety of purposes, and it is possible to get one even if you have bad credit. However, before starting this process, consider whether it is the right decision to borrow money or if you are better off waiting and saving to reach your goal.

If a personal loan is the right choice for you, take the time to compare all your options before deciding which lender to use. In any case, avoid the first offer you get. By shopping around you can be sure this is the best best rate available, or it can give you a better one elsewhere.

Use a marketplace like Credible to save some time comparing rates from top lenders.

Finally, if quick access to the funds is important to you, make sure you have all the documentation and figures ready before you apply so that the process goes smoothly.

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