Applying for a personal loan either online or in person is simple! Here are the basic steps to take:
1. Assess how much you should borrow
Ask yourself how much you need to borrow and how much you can reasonably afford to repay with interest. Try to borrow only what you need and make sure the payment amount is manageable.
Don’t overextend yourself and your finances. It might be worth employing a financial advisor to help you decide your best plan.
2. Check your credit score and credit report
Your credit score and credit standing are the biggest considerations when lenders evaluate a loan application. Personal loans mostly rely on your creditworthiness, so consider checking your credit scores and reports from each of the three major credit bureaus before you apply. Make sure to look for inaccuracies in your credit report.
If your credit score is in good standing and in a higher range, you can typically expect to pay a lower interest rate. Other factors, such as your financial history, income, and debt will play a role in determining your eligibility for a personal loan.
Want to improve future loan applications? Start building credit with on-time payments and everyday purchases when you open a Chime Credit Builder Secured Visa® Credit Card.2
3. Apply for pre-qualification
Pre-qualifying for a personal loan means you are pre-screened before you complete a formal application. This process allows you to review the offers you may receive from lenders and compare your options.
During the pre-qualification process, the lender will typically perform a soft credit check, which won’t affect your credit score.3 This means there’s very little harm in getting pre-qualified by multiple lenders so you can compare your estimated rates and payment amounts.
You’ll need to provide basic financial information and personal details, such as your name, date of birth, income, employment status, and loan purpose.
4. Choose your lender and loan
Shop around for competitive terms and rates when getting a personal loan. Consider the loan amounts, monthly payments, and interest rates from various lenders. Think about the pros and cons of borrowing from different financial institutions such as banks and credit unions. For example, credit unions tend to offer more flexible terms and lower interest rates, even to bad-credit borrowers.
After comparing your options, make sure you can make the monthly payments and that it fits into your budget. Research which lenders offer the features and services that you’re looking for. Consider things like credit building assistance or flexible payment schedules.
5. Submit a formal application
After choosing a lender, you can officially complete your personal loan application. Remember, pre-qualification doesn’t guarantee approval – you’ll still need to apply formally. Gather all your documents, fill out the application, submit it, and wait to hear back.
Depending on the lender, your loan might be reviewed and approved on the same day. A lender will typically run a hard credit check when finalizing your application. A hard credit check could drop your credit score by a few points but shouldn’t have any long-term effects.4 If you’re approved, the lender will send you the final loan documents detailing the terms of your loan, interest rate, length of the loan, loan amount, and your monthly payments.
