How to choose a personal loan
When you take out an unsecured personal loan, you’re borrowing money without having to secure the loan with collateral, instead focusing on your debt-to-income ratio and your demonstrated ability to repay the loan over time.
After applying for the personal loan, you receive the lump sum of the loan, less any fees, and you can use the funds as you wish for large expenses or to consolidate other, smaller loans.
Regardless of how you choose to spend your loan proceeds, you will repay the loan in monthly payments until you’ve fulfilled the obligations of the loan.
Reasons to get a personal loan
A personal loan is a lump sum of money deposited into your bank account. Once you have the funds in your band, you can use them for any purpose as they are not tied to a specific item, like a car or home loan might be.
You can use the proceeds of a personal loan in many ways.
Debt consolidation
You can use the proceeds of a personal loan to pay off several smaller credit cards or loans. Once those smaller loans are paid off, you will have a single monthly payment, and you’ll know exactly when you’ll have your debt paid off – when you’ve made all of the personal loan payments!
Home improvement
Large home improvement projects aren’t cheap, and often they require large amounts of cash up front get the work started. If you’re going to be updating your home or tackling a large repair, a personal loan can pay for the home improvement and let you make payments over time, keeping the updates affordable.
Large expenses
Have you been dreaming of a new boat or perhaps an amazing trip? A personal loan will let you expand your budget to pay for a large expense like a new camper, boat, trip, or other special item. You pay for the item and then pay it off over time with your personal loan payments.
Medical bills
Medical bills can cripple the household budget. Personal loans make it possible to pay for the medical bills easily. Your loan covers the bills, and you are just responsible for reasonable monthly payments instead of the entire amount.
Emergencies
One of the only certainties in life are the number of uncertainties that will pop up from time to time. Car problems, household repairs, emergency dental work and more can be very expensive and you need money as soon as possible. In an emergency, a personal loan makes it possible to address the problem immediately.
Before you take a personal loan
- Determine how much you need to borrow. You may be offered more than you need when you apply for a personal loan. Tabulate how much you need to borrow to avoid borrowing too much and having to repay money you didn’t need in the first place.
- Calculate your ability to repay the loan. You can’t figure out if you can repay a loan if you don’t know how much you’re spending every month. Calculate your monthly expenses or check in on your budget to see how much you can afford to repay. This may limit your loan amount.
- Check interest rates. Be mindful of the interest rates charged on personal loans. The interest rates can vary based on the length and amount of the loan as well as your ability to repay the amount. It’s worth noting that online lenders often have lower rates than traditional banks.
- Consider a co-signer on the loan. If you worry about being qualified for a loan on your own, consider asking a close friend or family member to be a cosigner with you to get a better interest rate.
How to get a personal loan
To get a personal loan, you will need to do a bit of planning and then apply.
Step 1: Determine how much you need to borrow and how much you can afford to pay back every month.
Step 2: Complete our online application to apply for the loan amount you’d like to borrow.
Step 3: Verify your income by connecting your bank account to your application.
Step 4: Review the borrower’s agreement and the repayment terms of the loan you’re interested in.
Step 5: Submit your application. If your application is approved, you can see funds in your account within 1-3 business days.
What goes into a personal loan APR?
The APR, or annual percentage rate, on a loan is the interest rate charged on the loan. The APR is calculated over the term of a personal loan and can be considered the “cost of borrowing.”
The APR on a personal loan will vary depending on several factors including your ability to repay a loan, the length of a loan, and the risk the lender is taking. The lower an APR, the less expensive a loan is for the borrower.
What are the requirements for a personal loan?
To take out a personal loan, you’ll be required to have two things.
- You must be able to demonstrate your ability to repay the loan. This is often evidence of a steady job with predictable paychecks.
- You must have a bank account that the lender can access for direct depositing your loan proceeds if you are approved for the loan.
Once you have been approved for a personal loan, you are required to repay the loan through the monthly installments set up in the loan agreement. These payments are typically made automatically through your bank account.
What to consider when getting an installment loan online
Applying online for a personal loan is faster and easier than applying at a traditional bank. You can apply online for a personal loan at any time online, and in some cases, you may be approved immediately.
To apply online, you will need your personal information along with your bank information. You’ll complete the online application, provide the necessary support documents, and submit your application. In many cases, you may be approved immediately for your personal loan. In others, it may take a day or two to review the information you’ve submitted.
Once your loan is approved, funds will be sent electronically to your bank account, and you will be ready to put them to use. Online loans are fast and often have a lower APR than traditionally banks, making them less expensive.
Benefits of an installment loan
Personal loans are installment loans. That means you borrow a lump sum, and you pay it back a bit at a time by making monthly payments. This has several benefits.
- Installment loans have a set timeline. An installment loan has a set number of payments and when you’ve paid them, you’re done.
- Installment loans have a fixed interest rate. You know exactly how much to expect to pay in interest when you take out the loan and it is calculated into your set monthly payments.
- Installment loans may be paid off early. You may be able to pay your loan amount off early and save significantly on interest charges.
Application checklist
Ready to apply? Here’s what we’ll need to know:
- How much money you’re hoping to borrow in a personal loan.
- How long you’d like to finance your loan or how much you can repay in monthly payments.
- Your current employer and income, including evidence of reliable paychecks.
- Your personal contact information including phone number, email address, and physical address
- Information about a cosigner or co-applicant.