Home Finance 3-Step Guide to Applying for a Personal Loan

3-Step Guide to Applying for a Personal Loan

Applying for a personal loan requires more thought, time, and effort in comparison to applying for a new credit card. But, with our quick three-step guide, you’ll be able to apply for a personal loan that’s best suited to your requirements.

Step 1: Do Your Research and Apply for Pre-Qualification

Pre-qualifying for a personal loan helps you review the rates, terms, and monthly payments you will likely receive once you submit your final application. Most lenders offer pre-qualification, and you can do this entirely from your mobile device or desktop in a few minutes. Keep in mind that pre-qualification doesn’t affect your credit score since lenders only do a soft inquiry into your credit rating. In order to get pre-qualified, you’ll need to provide the lender a purpose for your loan, the requested loan amount, desired loan repayment term and monthly payment, and some basic information about yourself.

Step 2: Gather Your Loan Documents and Choose Your Loan

When you have loan offers from multiple lenders in hand, it’s time to review your options and choose the best loan option. When reviewing different personal loan options, keep the APR in mind. It’s also important that you check the additional fees of the loan. Ensure you are also comfortable making the monthly payment. Once you decide which loan you would like to go ahead with, the next step is to gather your documents like your photo ID, proof of employment status, proof of address, education history, Social Security number, and your financial information including your total savings, outstanding debt, and retirement assets.

Step 3: Submit Your Application with All the Documents

The last step is to review the terms and conditions of your loan and submit your final application. Unlike when you apply for pre-qualification, when you submit a formal loan application, the lender will perform a hard inquiry into your credit history. This can temporarily ding your credit score. But, fortunately, this record only remains on your credit report for about 2 years. After you’ve submitted the formal application and all the supporting documents to the lender, you can wait to receive the funds. How long it will take to receive the funds depends on the lender’s terms and conditions.

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