It’s simple to imagine that we’ve all hit a rough financial patch from time to time and needed a little help to make it through. Or you’ve had an emergency come up and the lack of funds to cover it. Either way, most of us have needed a little financial assistance or will need it in the future.
While personal loans can’t be used to buy gas or groceries when you’re in a bind, they can be used for specific emergencies, such as a funeral or an emergency in the home, like a flooded basement. If you’ve considered applying for a personal loan before, or you’re ready to apply for one now, keep reading to learn some helpful tips to help you along the way.
1. Check Your Credit Reports
One thing banks look at to determine the interest rate on your loan is your credit score. They use your credit score and your credit history to determine whether you’d be a risk if they gave you a loan. Keep in mind the higher the credit, the lower your interest rate. Time.com recommends looking at your credit reports weekly to ensure they are in great shape. It’s also an excellent opportunity to check for inaccuracies and dispute anything incorrect.
Since lenders are looking at your credit score, it’s imperative to improve it if it keeps you from getting approved. To improve your credit score, make sure you’re making your payments on time, increase your credit limit, and find out about having negative entries that are paid off removed from your credit report.
2. Check the Criteria for Eligibility
Every company you go through to apply for a personal loan will have criteria you need to meet to be eligible for a personal loan. Before you apply for a loan, make sure you look at all the necessary criteria. Doing so will save you time and prevent you from getting denied because of your age or income bracket.
3. Apply for the Right Loan Amount
The point of applying for a loan is to get approved for the loan. If you apply for a loan amount you’re ineligible for, it will automatically get denied. Using a personal loan calculator is wise to determine how much money you’re eligible for. Putting down the correct amount of money will allow you to be accepted or denied for other reasons.
4. Don’t Apply for Too Many Loans at Once
When a person is in an emergency, they may apply for more than one personal loan out of urgency. While this may seem like a good idea to double or even triple your chances, applying for more than one loan at a time is never a good idea. Every time you apply for a loan, they place an inquiry on your credit report to see if you’re eligible for a personal loan through their company. Receiving several inquiries on your credit report will eventually catch up with you and lower your credit score.
5. Add Your Spouse
Adding your spouse as a co-applicant is a great way to help your credit profile. Adding a co-applicant works best if they have a high income or credit score to add to your application, increasing your chances of getting a loan because you’re adding to your repayment capabilities.
6. Choose a Lender Carefully
Choosing a lender may be the most important tip on this list, and that’s because choosing the wrong lender can cause a lot of damage to be done to your credit profile. Even if you’re in an emergency, never settle for the first lender that gives you an offer. First, go to iselect personal loan comparison to enter your information. Next, take your time researching the different lenders provided by iselect. As long as your needs are met and you’re not paying outrageous interest, you should have no issue finding the perfect lender for your loan.
7. Mention All Sources of Income
Lenders are concerned with whether or not you will pay them back, so that’s why they pay such close attention to your credit score. When applying for a loan, include every source of income you have because this will prove you have the means to pay it back. Whether doing nails on the side or working two full-time jobs, make sure you report the income to your lender.
8. Get Pre-Qualified by Multiple Lenders
When you get pre-qualified for a loan, you’re not actually getting approved for the loan. Pre-qualification is reporting your financial information and the loan terms you’d like to have in return for an estimate of the loan you’d be qualified for. Because you’re not applying for a loan to receive an offer, you don’t have to worry about negative reports added to your credit report. Remember, just because you are pre-qualified it doesn’t mean you’ll automatically be approved for a loan.
9. Look at the Fees
Before you sign anything, ensure you understand the fees associated with your loan. Pay attention to the following:
Repayment Period
When will the loan need to be paid off, and how long will you be making monthly payments?
Monthly Payments
Secured or Unsecured
Will you need to use your bank account for collateral?
Origination Fee
Are there any upfront costs?
10. Choose a Longer Loan Tenure
Choosing a longer loan tenure will allow you to make payments in smaller increments over a more extended period. Longer loan tenures are beneficial because it reduces the burden they can place on your family.
Applying for a personal loan may differ from what you want, but sometimes doing so is an absolute necessity. If you follow these simple tips, you should have no problem finding a reputable lender in no time. Remember, the higher the credit score you have, the better, so check your credit report every now and then. If you have any questions or concerns, you can always contact the lending company to ask a professional for some answers.