Getting a personal loan is not necessarily difficult, but some types of loans are more challenging to obtain than others. Unsecured personal loans often require a credit score of more than 660, and some are only available to people with scores over 700. Knowing what you need to qualify for a personal loan can save you time and energy in getting approved. Local banks and credit unions are the first places many people think of when they consider a personal loan.
Applying there will likely involve meeting face-to-face with a loan officer, and the experience will be personalized. Banks tend to have higher credit rating standards than other options, but if you are already a customer, the bank may offer some leniency. When applying for large credit accounts, such as a mortgage, home equity account, or personal loan account, lenders evaluate the equity you have. Loan offers and amounts, terms and annual percentage rates (“APRs”) may vary depending on the review of LendingPoint's rating and underwriting system of your credit, financial situation, other factors, and supporting documents or information you provide.
Obtaining a personal loan from an online lender is usually faster than more traditional options like banks and credit unions. Secured personal loans require collateral that the lender can use as payment if you don't pay your loan as agreed. This collateral can be other valuable assets such as cash accounts, investment accounts, real estate or collectibles like coins or precious metals. Conventional lenders usually perform a credit check to determine the likelihood that you will repay your loan.
Many credit card and loan companies provide a free monthly credit score from one or more major credit reporting agencies. These charges generally range from 1% to 8% of the total loan amount, depending on factors such as the applicant's credit score and the amount of the loan. When searching for a loan, you'll find that each lender has unique interest rates, loan terms and charges, and possibly a prepayment penalty. Be sure to analyze all the details before signing.
The pre-qualification process involves a soft credit check and allows you to compare loans from multiple lenders without affecting your credit. If you borrow less than you need, you may be forced to turn to more expensive sources of lending at the last minute. It's best to prequalify with multiple lenders to compare loans and find monthly payments that fit your budget. Credit unions tend to have more flexibility than banks when it comes to providing personal loans to people with bad credit or no credit. While some lenders are flexible about how you use funds, others can only approve loan applications if the money is to be used for specific purposes.
In the case of home or vehicle loans, the collateral is usually related to the underlying purpose of the loan. If you want to know what the rates and terms of your loan may be before the formal application process, look for lenders who have a prequalification process.