A personal loan can help you consolidate debt, fund large purchases, or pay for home remodels or repairs. To get the most out of a personal loan, you should be sure to prepare properly.
Determine how much you need to borrow
Carefully consider what you want to fund with your personal loan. If you apply for too much, you’ll have excess funds that you’ll still have to pay back—and that you’ll pay interest on. If you apply for too little, you’ll not be able to complete your goals appropriately, which might put you in a worse position than you are without the loan.
Understand your credit score
Your credit score is part of what determines the kind of interest rate you’ll be offered. The higher your score, the more faith an institution has in your ability to pay off the loan, so the lower the interest rate they’ll offer you. The lower your credit score, the riskier you appear to a potential lender, which can increase your interest rate and result in a greater overall repayment in the end. Before you even begin the process for a personal loan, be sure to find out what your score is, and take the appropriate steps to increase it if you can, including fixing any errors on your credit report, paying down current debt, and making monthly payments on time.
Research personal loans
Find the best option for your personal loan by researching online institutions, banks, and credit unions. Credit unions and banks will usually offer a more personalized loan process; furthermore, credit unions frequently will have lower interest rates. Often, Non-Banking Financial Institutions (NBFIs) will come with higher interest rates and hidden fees, so be aware of what you’re getting into. You might find, however, that certain NBFIs might offer you a loan even if a bank determines you’re not qualified.
Many lenders offer the opportunity to prequalify with a soft inquiry into your credit. Being prequalified doesn’t guarantee that you’ll get the loan, but it does give you an idea of the types of terms they might offer. Plus, prequalification is done without a hard inquiry into your credit, which can impact your score for up to a year.
Compare your loan offers
Once you prequalify for loans, compare the offers to determine which is best, remembering that these are tentative offers with potential rates and terms. Look over each of the disclosures to compare particular information, including the loan amount, the Annual Percentage Rate, the monthly payment, the loan terms, and information about fees and penalties, all of which can impact the overall cost of the loan. If you prequalify for a secured loan, you should also understand the repercussions if you happen to default, and you should be aware of whether there are prepayment fees in case you’re able to pay off the loan before the term ends.
Complete the full loan application with your selected offer
The full loan application will be more detailed than the prequalifying process. You’ll need to be able to provide a variety of information, which might include your monthly housing cost (rent or mortgage payment), your Social Security number, verification of your income, proof of financial assets, and your account balances in your checking and savings accounts.
Get approved and close
Once the vendor approves your loan, they’ll send final loan documents that outline the full details of the offer, including loan amount and interest rate, term, and monthly payment. If you agree to this final offer, you can close on the loan by signing the closing paperwork. Once they receive your signed documents, the lender will begin to process the funding to the account you’ve specified.
Manage and repay the loan
Receiving your funds is just the beginning of your loan. The next step is to start repaying it. Remember that missing a payment or being late with one can impact your credit score or even the collateral you put against the loan, so enroll for autopay or create calendar reminders for yourself.
Apply for a Bellco Personal Loan today
With competitive rates, flexible terms, and numerous features and benefits, Bellco Personal Loans* are popular with many people. Check them out here as part of your research, and when you’re ready to apply, simply click the link to the loan that best suits your needs.