Personal Loan Application: The Only Guide You’ll Need

Do you need to borrow a personal loan? Personal loans can give you access to cash at competitive rates. They are usually the preferred choice for borrowers because they are unsecured and have a longer repayment term. Listed below are the steps you need to follow to apply for a personal loan:

Decide How Much You Need to Borrow

When you borrow a personal loan, you don’t just repay the loan amount. You also pay the interest. So, don’t borrow more than you need. 

Check Your Credit Score

As lenders rely heavily on your creditworthiness to assess if they should approve your application, check your credit score before you apply for a loan. It’s also a good idea to check your credit reports and correct any errors you may find, to improve your score. 

Check Your Eligibility

Check the websites of different lenders to assess if you are eligible for a loan from them. You need to determine if there is a requirement of a minimum credit score and if there is a minimum income requirement. You also need to determine if you are required to have a minimum length of credit history (3 years or more generally).

Apply for Pre-Qualification

Once you’ve shortlisted the loans for which you are eligible, you will need to apply for pre-qualification. Many lenders may agree to prequalify you, however, it does not guarantee you will get the loan. 

Check the Loan Details

Once you are prequalified, you need to check details like the expected loan amount, APR, monthly payment, and loan term. You’ll have to be aware of the interest rate charged and fees and penalties involved. Many lenders charge borrowers a prepayment penalty, so if you intend to repay your loan before the repayment tenure, watch out for this. Also, check if the interest rate charged is fixed or variable. If it is variable, be prepared for the rate to change from time to time. 

Apply for the Loan

Once you check the details of different loans, you are likely to have found at least one loan that’s suitable for you. You can go ahead and apply for this loan. Once your application is approved, you will be required to sign the required papers and then obtain the loan amount.