If you need money to purchase a car, pay a medical expense or take a vacation, it may be worthwhile to apply for a personal loan. Personal loans are designed for borrowers with no credit history and repayment terms can be tailored to best fit your needs. Let’s look at how to apply for a personal loan and what information lenders use when approving or denying an application.
The Application Process
The first thing that you will do is submit an application to your preferred lender. Many lenders allow you to fill out and send loan applications electronically. Be sure to have basic information about yourself, such as your name, address and social security number. It will also be important to have employment, income, and other data by your side to make it easier to complete all necessary paperwork.
The Approval Process
The personal loan approval process generally examines the requested loan amount, your credit, and your income. Generally speaking, those who have a high credit score will receive a larger loan amount, and the loan may come at a lower interest rate. However, lenders also consider your debt-to-income ratio as well as your credit history when determining whether or not to accept your request for funds. In some cases, a lender may approve an application for less than what you requested. The lender will list its reasons for approving or denying your application in an email or letter.
The Money is Sent to a Designated Account
If your request for funds is approved, the money will be sent to the account listed on the application. Funds will generally be available within several hours or days depending on whether an application was sent electronically or through the mail. Lender policy may also dictate when the money arrives, and in most cases, your first loan payment is due 30 to 60 days after this occurs. The amount of each payment, its due date each month and your interest rate should all be listed within the approval letter or email that the lender sends out.
Obtaining a loan can provide financial flexibility and help to establish a positive credit history. If you anticipate any problems making a loan payment on time, talk to your lender immediately. It may be possible to make alternate arrangements to keep your account in good standing and avoid any blemishes on your credit history.