When you need to get cash in a hurry, a bank is the least likely place you will be able to get what you want or need. Their lending guidelines are very strict, and banks are not known for the speed at which they process loan applications.
That doesn't mean there aren't other avenues available. Under the right circumstances, you should be able to get a small personal loan if you know how to proceed.
It's worth mentioning that a personal loan is a far better alternative to taking on credit card debt. With credit card interest rates hovering between 12.99% and 24.99%, depending on the borrower's credit rating, that's a huge price for anyone to pay for money. That's why a personal loan makes more sense from a practical standpoint.
If you need advice on how to apply for and secure a personal loan, here are nine steps worthy of your consideration.
Secured or Unsecured?
If you have security that you can offer up as collateral for a personal loan, it might make it easier to secure a loan. It would be easier because it lowers or eliminates some loan requirements, and it might lead to a better interest rate. Acceptable forms of collateral might be a home, a vehicle with a title like car loan, and maybe a boat. An unsecured loan is also a possibility if you have no meaningful collateral.
Decide on Loan Amount Needed
As you contemplate how much money you want from your loan, you need to make certain decisions. You will want to make sure you get the amount you need because going back for more could be a problem. At the same time, you don’t want to take on more debt than you can manage.
Check Your Credit Score
When securing a personal loan, especially an unsecured personal loan, your credit score is going to be a lender’s top concern. Your credit score could affect the interest rate tied to any on offer you might get. You should check your score before applying as a means of helping you set reasonable expectations and pointing you in the direction of the right lender.
Consider All Available Options
There are all kinds of lenders that may be willing to offer you a personal loan. Some of the options might include a private finance company, a credit union, or even a payday lender under extreme circumstances.
Compare Lender Requirements and Interest rates
You should definitely compare lenders in order to get the best possible loan. The first thing you should focus on is lender requirements. Things to look for would include document requirements and credit score guidelines. The next thing on your list would be to compare interest rates. You should be able to get a general idea of what each lender charges before submitting an application.
Choose a Lender
After doing your due diligence, you should be able to settle on one specific lender. As a word of caution, it’s not a good idea to submit multiple applications at the same time. Too many credit enquiries coming in within a short time could have an adverse effect on your credit score.
Gather Required Documents
Once you know which lender you want to pursue, you can inquire about documentation requirements. Using those requirements, you need to gather up everything they will need to make an informed decision. As a word of caution, don’t provide lenders with anything they don’t request. That extra stuff won’t help, and it could hurt your chances for approval.
File Out and Submit Application
If you are using a retail lender, you will need to manually fill out your application and submit it with the required documentation. More likely, you will be filling out an online application with a need to scan/fax the right documentation.
Get Loan Approval
With an online lender, it’s always possible you can get same-day approval with the money in your account by the next day. The chances of that happening are higher if you provide the right documentation with the first submission. Once you get approval, you need to make your payments on time. By doing this, you will improve your credit score and chances of getting another loan at a later date.
By: Raymond James
Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.