Need Cash Now? Use a Personal Loan (it’s so simple)

A personal loan is a loan that can be used for almost any purpose. It’s a loan that is required to be paid back over a fixed period of time with interest.

With a personal loan you could look at borrowing anything between $1000 to way over $50,000, with interest rates ranging. When looking at loans you’ll find secured and unsecured loans.

Personal loans usually fall into the unsecured category, this means that it’s not supported or tied to any asset you own.

This usually makes it a little more pricey than a secured loan (one tied to an asset for collateral) however if you default on your payments you won’t have to worry about losing anything of value!

Personal loans can be helpful to get you out of a tight spot in a financial situation where the interest rates are through the roof! For example; interest rates on credit card loans are usually much higher than that which you would typically pay on a personal loan.

So taking out a personal loan to consolidate your credit card loan could end up saving you quite a bit of cash. “Okay, so I could save money? But its probably complicated to apply for a personal loan…where would I even start..” is what you might be thinking.

Don’t worry we’ve got your back. In this article we will be detailing the process on how to apply for a personal loan with ease!

1 Where to apply?

Everyones first thought when thinking of applying for a loan would be to approach a bank, however you do have other options as well;

Credit Union

Credit unions are institutions that are should be non-profit. The organisation’s goal is to serve the people in the community around them. It’s an organisation that is run by elected members rather than having a corporate structure.

In a normal case you would have to be a member of the union, at a small membership cost, to then apply for a personal loan.

Applying for a personal loan from a credit union can be advantageous in that they are less likely to deny your application due to a low credit score, because its a community based organisation your character and circumstantial history as a member will be taken into consideration as well.

Credit union’s interest rates are also generally lower. They are also the better option if you’re opting to borrow a smaller amount such as less than $2 500. You can apply for both a secured and unsecured loan from a credit union.

Banks

Banks of course are another option. If you have a good credit score and would like to borrow a large amount in your personal loan, a bank would be a better option for you.

Historically banks are the original loaners, and because of this people tend to trust the organisation more. Because loans from banks are so popular, and there are so many banks in existence in the US, there are some really nice, competitive interest rates and loan terms available to the public.

Especially if you are long-standing member of a bank, you will be privy to better terms, larger loan amounts, better interest rates and overall a much easier application process, as the bank will already have access to your financial information and history.

Banks of course are another option. If you have a good credit score and would like to borrow a large amount in your personal loan, a bank would be a better option for you.

Historically banks are the original loaners, and because of this people tend to trust the organisation more. Because loans from banks are so popular, and there are so many banks in existence in the US, there are some really nice, competitive interest rates and loan terms available to the public.

Especially if you are long-standing member of a bank, you will be privy to better terms, larger loan amounts, better interest rates and overall a much easier application process, as the bank will already have access to your financial information and history.

Online Lenders

In the digital age that we currently live in its only natural that there is a range of online loaners that fill the gaps between credit unions and banks.

Online loaners are becoming more and more popular because of their ease of accessibility! With an online loaner you can learn everything you want to know about the loan without ever needing to leave the comfort of your couch! You can easily compare the rates, apply for pre-qualification (we”ll get to that later), apply for the loan, get a quick response as to whether you were approved or not and ultimately get the money transferred directly into your bank account without any fuss.


Once you’ve decided on an institution you should then turn your attention to your credit score. In some cases this might even effect your decision when choosing an institution.

2 Check your credit score

As is with most things financial it is required that check your credit score before applying for a personal loan. Your credit score will have a great influence not only on your eligibility but also the interest rates you will have to pay. Credit scores are defined by the following scale;

A credit score ranging between:

300-629 (BAD)
630-689 (FAIR)
690-719 (GOOD)
720- up. (EXCELLENT)

Based on your credit score you will be able to have a rough idea of what your eligibility for a loan will be. We recommend checking your credit score (if unknown) on a credit score calculator like this one on NerdWallet www.nerdwallet.com/l/free-credit-score .

If you’re checking your credit score, its a good idea to perhaps even look at your credit report. This can be very useful to understand why your score is the level that its at, as well as to check if it’s actually accurate. Meaning there is no error in your report that is causing your score to be lower than it should be.

3 Pre-qualify for the loan

As briefly mentioned before when talking about online lenders, you can pre-qualify for loans prior to actually processing an application. In essence its a “soft” credit check from the institution of your choice that helps you check your eligibility.

Pre-qualifying for a loan can help you get a sneak preview into what offers or benefits you could get if you were to apply for the personal loan. You’ll want to do this with multiple institutions.

Prequalifying for the loan won’t cost you anything, nor will it effect your credit score in any way. So not only would you be getting a preview of what the institution can offer you, but it won’t cost you a thing, thus its a win-win scenario for you as an applicant!

When prequalifying for a loan obviously the institution of your choice will require some personal information and documentation to check thoroughly. You could possibly be asked for:

  • Any monthly financial obligations (debt of any kind)
  • Your social security number
  • Your date of birth
  • Income
  • Your current and previous address
  • Your employment information (Employer, address and contact details)
  • College name and qualification
  • Your maiden name (if you’re a woman)

Of course they will also want to know the terms of the loan you’re searching for such as:

  • How much money you would like to loan
  • The period over which you would like to pay it back
  • The purpose for you taking out the loan
  • Your desired monthly repayment

There is the chance that you might not be successful in the pre-qualification process. The possible reasons for this could be any of the following reasons;

  • Bad credit score
  • Your income is too low
  • A lack of work history or experience
  • Your income to debt ratio is too high, if its over 40% you should be wary of this as a reason
  • You have too many credit applications or inquiries in your recent past

Once you’ve applied for pre-qualification its now the time to pick an option of your choice and apply!

4 Pick, Choose and Apply!

Of course once you’ve pre-qualified and have a good idea of what that institution can offer you, its a good idea to then shop around and see what the best option is for you.

Of course you’ll want to find a loan that not only suits your needs, but also fits your budget. Its highly advisable to be realistic here when deciding what it is you can afford.

The application process can be pretty straight forward once you’ve pre-qualified, and chosen the loan with your preferred terms that best suits you. After giving you pre-qualification the institution’s offer should stand between 15-25 days before it expires.

You just need to accept the offer they have given you, and fill in the documentation they provide you with. The institution will most likely ask you for the same information and a bit more than that previously mentioned for the pre-qualification, if needed. However it might need to be more detailed such as

  • Your contact information
  • Your employment status
  • Your education history in detail (highest level of education earned, with the date of graduation)
  • Detailed financial information such as your total savings, any assets, and the banking details of where your pay check is deposited

It’s very important at this stage to read the fine print of the loan. Check, check and check the terms and conditions of the loan to ensure that there are no nasty surprises that will catch you unawares later down the line.

Once you’ve done this, go ahead and sign the agreement. This will in turn allow the institution to run a full hard credit check on you to verify that you are eligible.

Please note that this will cost you up to 5 points on your FICO score and can stay on your credit report for up to 2 years.

To save you the trouble later, you will want to have documents concerned with your income and assets on hand for verification such as;

  • Tax documentation
  • Monthly statements for active bank accounts, trusts, stocks
  • Pay stubs
  • W-2s

5 Get approved, Get money!

Once you’ve filled in the application submit it to the relevant persons. If any documentation is required to verify, the institution will, in many cases, contact you in a timely manner.

Depending on the institution you could receive the money from the loan within 2-10 business days, deposited directly into your bank account!

Following these steps should aid you in navigating how to approach the subject of applying for a personal loan.

Use the steps we’ve outlined, be sure to shop around and find the most appropriate option for you, borrow within your means, and be sure that your repayments are on time to maintain a healthy credit score.