Personal loans are loans generally used for one-time expenses. As of 2019, they are the fastest-growing form of lending in the US. Personal loans are offered by banks, credit unions, and other financial institutions.
But in order to be approved for one, you must first apply for one. Each loan is different, as the loan amount and interest rate are determined on a case-by-case basis. It is your responsibility to find out all that you can about the loan and the lender so you can find the best option for your circumstances. Finding the best personal loan for your needs can be tedious, as there are many to choose from and a lot of information to review, but it’s important to find out all that you can about the loan product, and the company providing it, to ensure that it’s the best loan for you.
Before you look for a loan provider, you should figure out what kind of personal loan is best for your exact needs. Review your financial history and figure out how much money you can afford to borrow and pay back in a timely manner.
Here are a few things you should determine before applying for a loan:
Why you need the loan: Many people take out personal loans to help pay off other loans or to pay for large expenses. You need to determine why you need the loan because lenders will ask you. Your answer may affect your chances as well as your loan amount.
How much you need to borrow: After deciding why you need the loan in the first place, it’s your job to determine the dollar amount to the penny. Tally up all your expected costs and add a bit more on top for additional costs that seem unlikely.
What monthly payments you can afford: The more you borrow, the more you have to pay back and the higher your monthly interest. Calculating the monthly payment that you can afford is incredibly important. Generally speaking, it’s better to err on the side of caution.
Check your credit score: Lenders look at your financial history before awarding loans because they want to assess the level of risk you pose. How likely are you to pay them back in time? Your credit score, among other factors, tells them what they need to know. This is why you should regularly check your credit report to ensure your financial activity looks good on paper.
There are many lenders that offer personal loans. Finding one that works for you can feel overwhelming. Once you’re ready to apply for a loan, here are a few places to start looking for a provider:
Your bank: Most banks offer personal loans, to those who have good credit. If you fall under that category, looking into the ones your bank offers is a good idea. Since you already have a relationship with them, they may be more likely to award you a loan. They know your financial history firsthand and can see whether you’ve been paying off your credit card on time each billing cycle, for example.
Online: The Internet is a great resource for information about personal loans. Personify, for example, has thousands of reviews on Trustpilot here. Many other websites review and break down different personal loan providers, going over their terms, rates, and much more.
The Better Business Bureau: The BBB does its best to help hardworking people avoid getting scammed by untrustworthy lenders. Always check to see whether the BBB has rated the lender you’re interested in working with. You can also see positive and negative customer reviews for each lender.
Referrals: Asking someone you trust to refer you to a personal loan provider they had a good experience with can make it easier for you to find the perfect loan for your needs.
Once you’ve done your due diligence and have narrowed down your list of loan providers to a few, solid contenders, it’s time to make an informed decision and choose the company that’s best for you.
Out of the providers on your shortlist, who has the best reputation? Who has the most accessible application? What about the best terms and rates? Keep in mind that the rates you actually receive may be different than the generally available rates.
Make a table if you have to—your goal is to choose the loan provider with the most pros and the fewest cons.
When you’re approved, make sure you read all of the paperwork and understand what is expected of you by the lender. You must be 100% certain that you understand all the terms and conditions before accepting your personal loan.
When it comes down to it, taking on a personal loan is a very personal decision. Make sure you choose a credible and trustworthy provider and ensure that you can uphold your end of the deal to pay the loan back in the agreed-upon timeframe. This will preserve your financial health and wealth while giving you access to the funds you need.