Personal Loans
How To Apply For A Loan
What You Need to Get a Personal Loan
If you’re applying for a personal loan, it’s essential to know what you need to prepare to get qualified. Although the requirements can vary from one lender to another, there are common personal loan documents that most lenders will look into when you apply. Knowing the qualifications for the application will surely help the process a lot easier.
Here are the things that you need to prepare and check before getting a personal loan:
DOCUMENTS TO PROVE YOUR IDENTITY
In getting a personal loan, the first thing that most lenders look for are documents that prove your residency and age. For this, they accept identification cards issued by the government, such as a driver’s license, passport, state-issued ID, or military ID. You can also present your birth certificate or certificate of citizenship as supporting documents because some lenders require two valid documents.
DOCUMENTS THAT VERIFY YOUR INCOME
Aside from your identity, lenders are also keen on verifying your capability to pay the loan to avoid risk on their end. They need documents like this since most personal loans are not backed up by collateral, meaning it lacks assurance on the lender’s end. Collaterals are the assets such as property or any valuable assets that you own that will act as payment if ever you’re not able to pay the debt.
So, to add assurance that you can pay the debt you own, they need to verify your income through employment history and current earnings. If you’re an employee, you can prepare any of the following documents:
* W2’s
* 1099 forms
* Contact information of your employer
* Bank statements
* Payslip
On the other hand, if you’re self-employed, you can bring to you your bank statements, income tax returns, or 1099 forms.
DOCUMENTS TO PROVE YOUR LIVING SITUATION
Other than identity and income, lenders also want to make sure that your living situation is stable. It’s also one aspect that shows that they can trust you. So, the lender might look for documents proving your address. It can be your recent bill for electricity or water, certificate of an agreement if you’re renting, or any other valid documents.
Most of the above documents are the basic requirements for applying for a personal loan. However, they are not the only things that you need to prepare before getting a loan. You also need to take note of essential matters that will help you get qualified as a borrower, such as:
YOUR CREDIT SCORE
Once you’ve submitted all the primary documents to the lenders, they will evaluate your application, and it includes assessing your credit score: the higher your credit score, the higher chance for you to get qualified for the loan. Usually, credit scores range from 300 up to 800, and the minimum requirement is 600 above, but it will still depend on your lender. But to be sure, before talking to a lender, check if your credit score is high enough to get qualified.
BANK ACCOUNT AND CREDIT HISTORY
Most lenders also check for your bank transactions, especially if you’re receiving your salary through your account. If they see that the flow of your transactions is consistent and that you’re handling your money well, they will probably consider your application.
In addition, lenders also evaluate your credit history or your previous loans if you have any. It will be their basis if you’re a good borrower or not. So make sure that you have clean records. If you still have loans to pay, be sure that you’re paying them regularly.
COLLATERAL
Some personal loans are secured with collateral. If you’re applying for this kind of personal loan, you need to have a valuable asset that you can pledge. It can be either your vehicle, house, properties, and even cash accounts or jewelry. It depends on what your lender can accept.
One last thing that you need to get a personal loan is to prepare yourself. You have to know if you’re ready for that kind of commitment because there are possibilities for risks if you are not yet ready. So you have to be financially and mentally prepared when you plan on getting a personal loan.
A personal loan is something that you should think through multiple times because it holds huge responsibility. It’s a responsibility that you need to keep for several years, so before getting a loan, make sure you’re capable of holding that responsibility.