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A personal loan is one of the most flexible borrowing options you have available. It can be used if you have to finance a car repair, a large purchase to make or if you need a little more money to pay rent this month. Whatever your reason, a personal loan can help put you in a better place. If you’re looking to apply for a personal loan, here’s what you can expect:
1. Plan out how much you’ll need. As with most loans, personal loans have interest you’ll need to pay in addition to what you borrow. To reduce the amount you’ll pay on interest, limit the amount you borrow to what you absolutely need.
2. Consider your options. If your credit is too low to qualify for an unsecured personal loan or the offered rate is too high, you might want to pursue a secured personal loan. Secured loans are easier to qualify for and usually have better rates than standard personal loans. However, note that secured loans require collateral, such as your savings account, to qualify. This means if you’re unable to pay your loan, your lender could take ownership of your collateral.
3. Check your credit. For a better chance at qualifying for an unsecured personal loan, you’ll want a good credit history. While it’s difficult to quickly improve your credit, it’s possible there are errors holding you back. Request your free credit report from annualcreditreport.com and report any errors to have them removed. In addition to improving your ability to qualify for a personal loan, a better credit history can also boost your credit score. The higher your score is, the lower the rate you may qualify for on your personal loan.
4. Gather relevant information. The loan application will likely require information about your finances and how you intend to use the funds from the loan. During this process, you may be asked to provide the following: current debts, income, employer’s contact information, your contact information, previous addresses, Social Security number, and date of birth. DCU Personal Loans don’t require prequalification or soft credit checks before the final application. Once an application is submitted, there is a hard inquiry, which is when a lender makes a credit information request that includes your full credit report.
5. Be aware of the fine print. Before you finalize your application, become familiar with the terms and conditions of the loan. Are there prepayment penalties? Will payments be automatically withdrawn from my checking account? What happens if I make a late payment? Asking yourself these questions can prevent surprises down the line and help you plan accordingly.
6. Submit your application. You may need to provide additional documentation at this point in the process. These documents may include a copy of your pay stub, government ID, and proof of residence. When you formally submit your application, you will also notice a hard credit check on your credit history, which may temporarily impact your credit score.
7. Receive funds. On average, most people receive their personal loan funds within a week. Lenders who provide online applications– including DCU – are generally quicker with processing, with many people receiving their funds within one or two business days of the application submission.
In times of uncertainty, a Personal Loan can be the lifeline you need. At DCU, we’re here to support our members through the good and bad. You can learn more about our Personal Loans and apply online.
This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.