How to Get the Best Personal Loan
Thinking about moving cross-country to start a new beginning, adapt to financial hardships or even consolidate credit card debt, a personal loan can help cover your expenses without breaking the bank.
When a personal loan is unsecured it means that the lenders do not require collateral in return for the money. The collateral can be anything from your house to your car. Loan amounts range from $1,000 to more than $50,000 and are paid back in fixed payments. Personal loans are typically paid back over two to five years, all rates and terms vary from each user based on your credit.
Six steps to getting a personal loan
- Check your credit score
- Get pre-qualified for a loan
- Shop around Squeeze for the best personal loan
- Compare offers with other credit options better for you
- Read the fine print of the loan
- Final approval!
Check your credit score
As we all know, a strong and high credit score gives you a better chance of qualifying for a personal loan at a much lower interest rate than others. You can determine your creditworthiness by checking your free credit score on many websites like Equifax, Experian and TransUnion, some banks offer it to their customers as well.
Here is a breakdown of the credit score categories:
- 720 and higher: Excellent credit
- 690-719: Good credit
- 630-689: Fair or average credit
- 300-629: Bad credit
How is yours looking? The goal is to build it up before you apply for a personal loan. There are two big factors that affect your credit the most, one being that payments are made on time and the second one is the amount of credit you use relative to the credit limits.
Get pre-qualified for a loan
Pre-qualifying for a personal loan can give you a little insight at the offers that might be pitched in your direction. There are quite a few vendors that might perform a soft credit check during the process but that won’t affect your credit score, it is solely for your benefit.
You may be asked for the following information during the pre-qualification process:
- Personal information (address, email, phone number, D.O.B)
- Social security number
- Education level
- Employment status
- Yearly income
Reasons for not pre-qualifying for a loan:
- Too little income
- Little or no work history
- High debt to income ratio
- Too many credit inquiries; such as credit card applications
Shop around for the best personal loans
Shopping around for a personal loan can get a little tedious because you want the best rates possible.
With the pre-qualification process done on Squeeze.com, you can get estimated rates in as little as 5 minutes. We have 10+ trusted online lenders waiting to fund you.
Compare your offers with other credit options
See if you qualify for a 0% interest credit card
With good credit, searching for the best credit card that has 0% interest on purchases for a year or more can be quite simple. If you can repay the loan in that timeframe, then the credit card option is the cheapest way to go.
Consider a secured loan
If your credit isn’t the best it can be then the interest might be better and lower with a secured loan. A secured loan needs something in exchange for the money, collateral. It can be a car, a home you own or even a savings account.
Add a co-signer
An option for those who don’t qualify for a loan on their own can get a co-signed personal loan. The lender will consider the credit history of both along with the income in order to qualify and approve the loan. The terms might be worked in your favor.
Read the fine print
Below are some answers to common questions you may have that are explained in the terms of the loan:
Are there prepayment penalties?
Most online lenders do not charge a fee for paying off your fee ahead of time.
Will my monthly payment be automatically withdrawals?
Some lenders require a checking account to be set up for automatic payment withdrawals. If this is the case, consider setting up a low balance alert via text message or email to avoid any overdraft fees.
Will there be any fees not clearly displayed?
No, everything should be disclosed. Make sure to double check the cost of your loan, including all the origination fees. It should be displayed and figured into your annual percentage rate (APR).
What are some customer-friendly features?
Payments are reported to credit bureaus
It is beneficial to your credit score if the lender reports your on-time payments to credit reporting agencies.
Flexible payment features
It is always nice to be able to have your due dates work around your financial needs, some lenders will let you choose your date. Also, some may offer occasional late forgiveness or in other cases, skip a payment.
Direct payment to creditors
Some lenders will offer to send borrowed funds directly to creditors they owe money to. This is especially beneficial for those borrowers who are consolidating their debt.
Now, this is the easy part of it all, once you've selected a lender that matches your ideal rates you'll have questions like the following:
Do I need to give them identification?
Answer is yes, they will need a passport, driver’s license, state ID or your Social Security card.
If they ask for verification of my address, what do I bring?
Utility bill or a phone bill is sufficed, even a copy of your lease.
Will they ask for proof of income?
Yup, they will. The lender just needs to confirm that all the information that was provided in the pre-qualifying process is correct. A W-2 or a pay stub would work to show proof on income.
After this information is given, the lender will run a hard credit check that will knock a few points off your credit score – nothing major. Upon final approval, depending on the lender and the terms that were agreed on the funds should be received within a week.
Finding the best personal loan is difficult but Squeeze facilitates the process and cuts down the time it takes shopping around. We help you find the lowest rates possible.