Certainly, your bank may want to know what the funds will be used for as one condition for receiving credit, but you can typically find a lender that will extend the money you need to take a vacation, pay for your daughter’s wedding, buy a diamond ring or use for some other purpose. You can obtain a personal loan by following certain steps outlined here.
1. Contact a lender. Your bank or credit union is the logical first place to shop for a personal loan. You are not restricted to certain lenders, but you may find the process simpler by doing your dealing with someone that already knows you.
2. Provide identification. The USA Patriot Act requires that new customers show a valid photo i.d. when opening a new account. Your existing bank may require the same, therefore be prepared to offer your driver’s license or passport as proof of who you are. Your lender will make copy of your information and return the original document(s) to you.
3. Offer supporting documentation. Your lender may require certain supporting documentation from you to process your loan. Expect to supply your two most recent pay stubs, tax returns for the past year or two, and whatever other documentation is necessary to expedite the personal loan.
4. Under limits and rates. Ask your lender about your personal loan options including terms and interest rates. Secured loans, those where collateral is given, offer a lower rate than unsecured loans. Your lender will pull your credit report and base its decision on your credit score, your current income and your ability to repay the loan. Borrow only enough money to cover your costs. Choose a shorter term loan for a lower interest rate, but for higher monthly payments.
5. Close your loan. Once you and your lender agree to terms, you will arrange for a mutually agreed to closing date. Close your loan and obtain a check for the loan amount or have these funds deposited to your account.
Before you apply for a loan, consider obtaining your personal credit reports for your review. Such reports are offered for free, conditions apply, by visiting AnnualCreditReport.com. Update your information and make corrections, and your credit score may rise accordingly, making it easier for you to obtain credit and at a favorable interest rate.
See Also — How to Apply for a Consumer Loan
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