A personal loan is a type of credit that can help you finance purchases and consolidate debt. It is available from banks, credit unions and online lenders.
Getting a personal loan requires some research and planning. You’ll need to start preparing financial documents such as bank statements or pay stubs.
Getting a personal loan
Whether you’re looking to cover an unexpected expense, make a big-ticket purchase or pay down debt faster, a personal loan from a traditional bank, credit union or online lender may be the answer. But getting one means taking the time to understand where to start and what you need in order to apply.
A good place to begin is by checking your credit report. This will give you an idea of your credit score and what you can expect from a lender’s interest rates and terms.
Then, you can use a personal loan calculator to calculate your monthly payment and how much you’ll pay in interest over the life of the loan. You can also compare interest rates and repayment terms from multiple lenders to find the best deal for your unique financial situation.
You can then apply for a personal loan online or at a branch of your choice. In most cases, you’ll be approved for a loan within a week.
Interest rates on personal loans
Personal loan interest rates depend on several factors, including your credit score and your credit report information. Lenders also consider the amount you are borrowing and how long you plan to repay it.
Typically, a lower rate means a better deal for you. However, you may have to do some shopping around to find the best rates.
To save money, look for a lender that offers a low interest rate on personal loans and a low monthly payment. A lower monthly payment can help you budget for the total cost of your loan and pay it off faster.
A higher credit score usually leads to lower interest rates on personal loans, though lenders often use a risk-based approach to determine your rate. You can also get a lower rate by adding a co-signer or collateral to your personal loan application.
Refinancing personal loans
Refinancing your personal loan is a way to get a new loan with better rates and repayment terms. You can refinance a personal loan at a bank or credit union, or find one online.
If your credit history has improved since you first took out the loan, it may be possible to get a lower rate on a new loan. You can also refinance your loan if you have more money available to use in a new situation, like home renovations or a major purchase.
However, refinancing your personal loan can have a negative impact on your credit score. This is because a lender performs a hard credit check when you apply for the new loan.
However, keeping up with payments on your refinanced personal loan can help improve your credit score over time. As with any type of debt, it is important to keep up with your monthly payments and avoid missing any.
How long does it take to get a personal loan?
The length of time it takes to get a personal loan depends on the lender and how quickly they can verify your information. Lenders typically run credit checks, but some also look at alternative credit data like a debt-to-income ratio.
Banks and credit unions are the most common sources of personal loans. They offer a number of benefits, such as better interest rates and more flexible eligibility requirements than online lenders.
However, they also take more time to process and fund loans. Generally, it can take one to five business days to get your funds after you’ve been approved.
Getting pre-qualified can speed up the application process. Most lenders have a prequalification service that lets you see your interest rates and terms without a hard credit pull.