10 Tips for How to Get a Personal Loan
According to Lending Tree, about 20.2 million consumers in America have a personal loan. And, while they make up a small portion of consumer debt, these types of loans are becoming more and more popular.
Why do people use personal loans? One of the most common reasons is to consolidate credit card or student loan debt. However, they’re also popular for financing one-time expenses such as weddings, honeymoons, or emergency medical expenses.
It doesn’t matter what you need a personal loan for as long as you’re able to make the minimum payments and stay on top of the debt you’re assuming.
Tips for How to Get a Personal Loan
1. Focus on Your Credit
One of the biggest factors that will determine whether or not you’re approved for a personal loan is your credit score. The best personal loans for bad credit still require that you have at least about a 580 credit rating. And, even then, they come with insanely high interest rates.
Instead of opting to take out a personal loan with bad credit, simply work towards improving your credit. To do this, you can download a credit monitoring app like Float, pay your bills on time, have a good mix of credit, and keep your credit utilization rate low.
2. Boost Your Income
We know, this is pretty counterintuitive, right? If you were able to boost your income you might not need a personal loan. However, if you’re looking to enjoy the lowest personal loan rates, it helps to boost your income. Lenders will ask about your annual income when applying for a personal loan.
So, think about starting a side hustle. Earring an extra $150 a week translates into an additional $600 in income per month. Over the course of a year, you’re adding $7,200 to your annual income. That’ll look great on your next loan application.
3. Look for a Good Lender
Credit unions tend to offer lower interest rates on their loans along with more flexible loan terms. But, they don’t tend to offer larger personal loans over about $2,500. This means it’s important to shop around.
Look for a good lender who’s going to offer you the best rates that you qualify for. You can get pre-approved for a personal loan online. Personal loans online approval is quick and easy and will help ensure you have all of the information you need to make an informed decision.
4. Set a Loan Limit
If you’re taking out a personal loan to cover an expense, it’s important to set a loan limit. Don’t ask for $10,000 if you have poor credit or if it’s not completely necessary. Personal loans are best for emergencies and one-off expenses.
So, calculate exactly how much you need to borrow and ask for that amount. This will increase the chances that you’re approved for the loan and will help you reduce your monthly payments to avoid falling deeper into debt down the road.
5. Ask Somebody to Co-Sign the Loan
Having trouble getting approved for a personal loan? Consider asking a family member or friend to co-sign the loan for you. Oftentimes, if you don’t meet the credit or income requirements to take out a personal loan, lenders will allow you to have someone to act as a co-signer for you.
The co-signer acts as a backup in a sense. They’re agreeing to make the loan payments or to at least be responsible for the payments if you can’t make them or fall behind.
6. Choose the Right Loan Type
Personal loans come in many different forms. You’ve got secured loans, unsecured loans, credit card refinancing loans, and even debt consolidation loans. Before picking a loan and signing the agreement, do you research and ensure you’re choosing the right loan type for what you’re going to use the money for.
7. Compare APRs
While most people tend to look at the interest rate of a loan to determine if it’s “good” or not, a loan’s APR is a better measure of the true cost.
Why? A loan’s APR will include all of the other fees associated with it, such as the origination fee, processing fee, and even the document preparation fee. In short, the APR includes the interest rate plus the fees, which is important to know before signing anything.
8. Check the Loan Fees
Aside from the aforementioned processing fee and origination fee, there will likely be other fees associated with the loan. These can include a late payment fee or even an annual fee. Make sure you know exactly what the loan fees are and compare those to the loan fees you’d accrue from another lender.
9. Make More Frequent Payments
Assuming you’ve found the right personal loan for your financial needs, it helps to make on-time payments to avoid fees. But, it also helps to make more frequent payments. Doing so can help you avoid accruing more interest than necessary, which will ultimately reduce your overall amount owed.
10. Save More for Loan Payments with Cheese
Congrats on finding the right personal loan! Now, it’s time to start thinking about how to save more for loan payments. Or, how to save more in general to avoid needing a personal loan in the first place.
The Cheese Debit Card can help you with that. Not only is it FDIC-insured and comes with $0 in fees, but you can also earn up to 3% basic saving bonus simply by referring friends and families to Cheese. In addition to the high savings bonus, you can earn a cashback reward up to 10% on each dollar you spend at our affiliate partners. That’ll certainly help you save money to put towards loan payments.
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