Whether you’re looking for a way to raise your credit score, need to cover a significant expense, or fill a gap in your budget, asking for a personal loan is an understandably daunting process if you don’t know where to start. However, it doesn’t have to be a complicated process as understanding where to start and how to compare offers and rates will help you secure what you need at the best terms for you. Below, we will cover the steps of taking out a personal loan.
Personal Loans Are Different
Before we cover the steps of how to take out a personal loan, it’s essential to know that personal loans are different from other types of loans. Personal loans are different from other types of loans as they usually don’t require collateral or an item of value that you agree to forfeit for lack of payments. According to Lantern by SoFi, “It’s a good idea to compare personal loan rates from different lenders to find the best deal.”
Know What You Need
Before taking out a personal loan, you need to know how much you need to only borrow for that amount. You also should know how much you can afford in terms of monthly payments, which is why it’s always good to check your budget first. You might go with a personal loan with a longer-term, so you can have a lower monthly payment in conjunction with low personal loans rates, so you don’t end up having to pay more in the long run.
Check Your Credit Score
You can improve your credit score in several ways, including making payments toward your credit card or other loans on time or keeping the amount of credit you use below 50%. The higher your credit score, the lower the rate you’ll receive on your personal loan, and you shall have a better chance of qualifying for your personal loan. There are apps where you can track your credit score, and you can request a free credit report to see areas for improvement.
Compare Rates And Lenders
It’s important to shop around by comparing rates and lenders as there are many options to choose from, such as a peer-to-peer online lending marketplace, a brick-and-mortar bank, or a credit union. Choosing the right lender will depend on finding one that doesn’t charge hidden fees or penalties and has the repayment terms and interest rates that are right for you.
Choose A Lender
Once you choose a lender after you’ve been pre-qualified, it’s time to complete the application process. You’ll need proof of income, identification, and residence, and most people are approved within 24 hours. It’s necessary to read the fine print before signing, and you’ll need to watch out for prepayment penalties, whether the lender automatically withdrawals the money or if there are any surprises with the APR.
Once you agree on the loan terms and sign, you should receive the money fairly quickly. If you’re looking for a personal loan, check personal loan rates on trusted platforms like Lantern by SoFi to get started on your new loan.