Consumer Loans
Consumer loans are very common among people. Almost everyone has taken out some type of loan in their life. The most common for most people are a home or vehicle loans.
There are some things that you should know before you borrow money. You should know your credit history and your credit score. You can find this information by checking the three major credit bureaus.
Other things that you should know about are the different types of loans that you could get. Besides home and vehicle advances, you could also get personal loans, home equity loans, and lines of credit. There are more than this – you could probably find one that fits your needs.
This article will help you to find out more about loans. It will go through some steps to help you to søke, or apply, for a loan. You can learn more by doing research on the subject.
How to Apply
- Assess Your Budget – You want to check your budget before you apply for a new loan. Make sure that you have the extra money that you can afford to pay the loan back on a monthly basis. If you can’t do this, see if you can find another way to get the money.
The best way to find out if a new advance would fit into your budget is to add up all your monthly expenses. After this, calculate your take home pay and then subtract your monthly expenses. This will leave how much money that you have left over.
- Check Your Credit – As was mentioned before, you can check your own credit score and credit history. These are factors that any lender will check when they are reviewing your application. Those will be the first things that the lender will look at.
Your credit history will show the lender how well you pay your debts. The better scores that you have, the lower interest rates that you will have. It also makes it easier for you to get the loan.
Another thing that lenders will look at is your debt-to-income ratio. This is the amount of money that you spend subtracted from the amount of money that you make: https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-en-1791/. This ratio needs to be below 36%.
- Apply for Prequalification – Prequalification doesn’t mean that you have been approved, it means that everything looks good for an approval. Prequalification doesn’t do a hard inquiry on your credit report, just a soft one. You will still need to provide the lender with an application.
You will need to give the lender the following information:
- How much you want to borrow
- How you will use the money
- Your annual income
- Your employment status
- The last four digits of your Social Security Number
Most lenders offer personal loans, so you should shop around for the best one for you. Don’t just accept the first offer that you see. You might find a better one if you shop a little.
As you are shopping, look for lenders online, as well as the banks and credit unions. You never know where you will find the best offer. Just make sure that you read online reviews for the online lenders – you don’t want to be scammed.
- Compare Your Offers – After you have prequalified, the lender will let you know how much you have qualified for. They will also let you know your estimated monthly payments, estimated interest rate and fees, and your loan term. They will also let you know your estimated APR, or annual percentage rate.
You must remember that they are tentative offers and that once they do the hard inquiry, they might change some of the terms of the loan. You won’t get the actual information until you sign the actual application, and they pull that hard inquiry. This is still the point at which you can compare your offers.
Things that you should consider are the APR, the loan term, and the origination fee. The APR is the interest rate and all included fees. The loan term is the number of months the loan will be, and the origination fee is the fee that is charged to do your paperwork.
Once you have checked out all the offers before you apply. You don’t want to choose the first one that you come to. You want to choose the best one for you.
- Apply – The next step after you choose your lender is to make the official application. Prequalification did not guarantee your loan, so you still need to do the official application. You need to provide more information this time. The information includes:
- Monthly housing costs
- ID verification
- Complete Social Security Number
- Income verification
Your lender will do the hard inquiry, but it shouldn’t hurt your credit report for very long. See here to learn more about a hard inquiry. If you make your payments on time, your score will go back up to where it was before, if not even higher. Making your payments on time will help you in many ways.
There are steps that you can take to make the process go faster. You can make sure that all your documents are accurate and complete. You also need to include all the papers that are included in each document – including those that are marked “intentionally left blank.”
Once you have made sure that you have everything in order, you can submit it all. Don’t leave anything out or it will take longer to process the paperwork. Send in or bring in everything.
- Close on the Personal Loan – After the lender has read over the application and decided to approve your advance, they will send the final documents for you to sign. These documents will tell you everything that is in your loan. This will include your interest rates, all fees, the term of the advance, and the monthly payments.
You will then sign the documents and send them back. The loan is then official, and you will get your funds. You should have your funds soon, usually in as little as the same day.
This should complete the process and there should be nothing left for you to do. You will need to make the monthly payments on time each month. If you do this, your credit score will return to its previous level.
Conclusion
You should shop around for the best loan for you. Look for the right interest rates, loan lengths, and monthly payments. You should check out at least three lenders to make sure that you find a good deal. After you find the lender that are good for you, you should fill out a prequalification application.
You also need to check your credit history before you apply for prequalification. This can tell you if your credit score is high enough for you to get the loan. It will also tell you if there are any mistakes in your history. If you find mistakes on your history, you can file a dispute and fix them.
Once you have chosen your lender, be careful and send in all the paperwork that is necessary. Try to get it all in at once so that you can get through the loan quicker. Once you have everything in order it should only take a little while to approve your loan.
