Published on June 9th, 2022
Whether you’re consolidating debt, funding a home improvement project, or just in need of extra cash to pay off bills, personal loans can be an excellent way to get the money you need fast and on your terms.
Before you apply for a personal loan, there are some things you should know and some things you shouldn’t do. Here are the dos and don’ts of applying for a personal loan to get the best possible deal and ensure that your application is approved.
What To Do When Applying For A Personal Loan
When applying for a personal loan, it is important to answer all questions accurately. Many factors may influence whether or not you get approved for your loan, so be sure to be as truthful as possible.
The more information you can provide, including any extra income you have that could support payments on your loan, can help improve your chances of being approved.
So make sure that you don’t leave out any details when answering questions during an application. Getting pre-approved by your lender before looking at homes or other purchases is also helpful because lenders may ask to verify how much money is available if they believe some funds were already used in another purchase.
What NOT To Do When Applying For A Personal Loan
Lying on your loan application is never a good idea. Lying to your bank or lender could result in your application being declined or worse, turned over to an investigator. If you’re found guilty of making false statements, it could have serious repercussions on your financial future.
In addition to potentially causing you to miss out on funding that would otherwise be available, making false statements on credit applications can land you in trouble with state or federal prosecutors—and if you’re found guilty, such charges can remain on your record and make it difficult (or impossible) to secure other types of loans in the future.
Do Your Research
There are lots of reasons people take out personal loans. It might be to pay off holiday credit card debt, make home improvements, or help with tuition costs, but every reason is unique. Start by considering your situation:
- What do you need money for?
- What’s your repayment period?
- How much will it cost?
Once you have those answers nailed down, figure out which banks or lenders could lend you what you need. Research online to find out which institutions offer personal loans in your area.
The next step is to choose one—and it might be easier than you think! Some lenders (especially smaller community banks) are very open to meeting borrowers face-to-face, even if they don’t know them already.
Apply With An Online Lender Instead Of Directly From The Bank
You might think it makes sense to apply directly with your bank or credit union, but that often means you’ll be denied and have to start over again if you want to try applying with an online lender.
The whole process can get very confusing. Instead, take advantage of a simple application process at an online lender.
You’ll get an answer within 24 hours about whether you’ve been approved (and possibly how much money you may receive). It doesn’t cost anything to apply either!
Compare Your Different Loan Offers
Even if you have one or two different lenders in mind, it’s always a good idea to shop around for loan offers. Interest rates can vary greatly between lenders, so be sure to compare your options carefully.
If you’re comparing different loans, do so with care and don’t make an offer until you feel comfortable doing so.
You may want to read through each lender’s terms carefully before deciding which offer is best. Also, be careful when looking at loan repayment schedules; some loans require monthly payments but some loans require bi-weekly payments or other payment schedules that aren’t typical (and aren’t necessarily better).
Take Advantage Of Promotional Deals
A cash-back credit card can help you earn extra money. Some credit cards offer perks, such as airline miles or discounted hotel stays, but what helps them stand out is their cash-back deal. You can use your cash-back credit card to buy items in your everyday life, from groceries to fuel. Your rewards will be deposited into your account monthly or at year’s end.
Depending on your card provider, you may be able to redeem rewards immediately for an extra boost (or put them toward future purchases). Remember: Cash-back reward cards aren’t meant as a long-term financial solution; they’re designed so you can get some quick cash and then pay off the debt over time.
Protect Yourself From Scams
Sometimes there is a thin line between bad credit loan companies offering legitimate services and scam companies out to swindle you. As these companies prey on people with bad credit, it’s critical to do your homework when looking into personal loans. Protect yourself from being scammed by doing plenty of research before taking out any type of loan.
Reviewing loan terms, reading customer reviews, and learning about interest rates and fees—are all important steps to take before applying for any type of loan. When dealing with a company that offers personal loans, be sure to read over all documents carefully, ask questions if anything seems unclear or confusing, and make sure you know exactly what you’re getting into before applying or signing on any dotted lines.
Follow Up On Every Step In The Application Process
It may sound crazy, but when you apply for a personal loan, it’s tempting to let your guard down if you think you’ve got all your ducks in order. It could be that you forget to send in paperwork, or make an error on your application. Whether small or large, it’s important to always double-check before submitting anything online.
When it comes to taking out loans with potential pitfalls attached – like credit cards – following up throughout every step of your application process is extra critical. It can make a difference when there are thousands of dollars on the line!
Getting a personal loan is an easy way to get financing when you need it quickly. However, there are some important factors to consider before getting one, including having a good credit score, being able to afford monthly payments, and understanding all loan conditions.
You should also be prepared to pay interest on top of paying back the principal. If you don’t believe you can handle these responsibilities or are not sure to apply for a personal loan is right for you, think twice before going forward with your application.