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A personal loan is truly the loan for any reason. From consolidating your debt to redecorating your home, taking a vacation, there are many reasons for which one might apply for a personal loan. A personal loan allows the borrower to borrow a certain amount of money without requiring any collateral, and pay it back through monthly installments.
The lender’s requirement for offering a personal loan is very simple. Most financial institutions ask for:
Social security number
Current employer information
Previous employer information
Purpose of the loan
Co-applicant information, if applicable
Apart from traditional lenders, major credit card companies also offer personal loans. To avail this, you must be a pre-approved card holder. Your creditworthiness and other factors are taken into consideration to decide the APR and loan amount. Even though this process seems simpler and easy, not all customers might be pre-approved to procure a higher loan amount or a low APR. Major card companies offering personal loans also allow you to set up automatic payments, thus simplifying the monthly payment process.
It is imperative to have a good FICO score for being eligible for a personal loan from a traditional bank. Some borrowers perceive applying for a loan from a big nationalized bank as a hassle because of their many rules and paperwork. This leaves them with the option of applying to a credit union or a local back. Credit unions are usually smaller in size as compared to a nationalized bank and thus the attention a borrower gets is more personalized. It is recommended to open an account with a credit union and do some transactions with them for a continued period of time, thereby building a credit history. In the future, if the situation demands you seek a personal loan, your relationship with the credit union comes handy.
Availing a personal line of credit can be another option to securing a personal loan. A personal line of credit gives you a maximum amount of money that you can use over a period of time, and you can borrow against that amount as and when a financial need arises. The repayments are made only for the amount of money borrowed, not the entire amount of line of credit. Good credit is a prerequisite. Lines of credit tend to have higher interest rates and smaller minimum payment amounts. They have an immediate and larger impact on the borrower’s credit score. An easy personal loan helps you lead your life to the fullest.