Is your financial situation at the point where you're considering applying for a bank loan or a mortgage loan? Are you having financial emergencies or dealing with outstanding debts that require your immediate attention? It may be time to consider a personal loan application. Allow us in the admin department to expound just what these loans are, how you can qualify for one, and many other things you should consider before applying for a loan.
What are personal loans?
To put it simply, personal loans are borrowed money that can be used to deal with outstanding debt, a big-ticket purchase, emergency expenses, and many more. Thinking of buying a car or a house? A personal loan may just be what you need to finally make that purchase.
Essentially, a personal loan is a relationship between a lender and a borrower. Traditional banks typically lend money to people with good credit scores who are looking to make a big purchase. These loans are paid back through a monthly payment method over the course of a few months to even a few years, depending on an agreement between the lender and the borrower. Depending on the loan provider, the transfer may take as little as 24 hours or even weeks, and the money may be borrowed in bulk. Institutions such as credit unions tend to offer unsecured loans, secured loans, and so on all for decent personal loan rates.
Personal loan requirements to consider
To qualify for a loan application, these are some things you must put into careful consideration:
Credit Score and History
If you want to get a personal loan, you should consider your overall credit score. It's one of the most important factors a lender will consider when evaluating a new loan application. Credit scores are based on factors like payment history, amount of outstanding debt, and length of credit history, and usually range from 300-850.
Make sure your credit score isn't below 600. If your credit score is low, your interest rate could be higher. With high credit scores, you can have much better financial advantages. If you have an excellent credit score, you can also have access to more options, lower interest rates, and so on. Still, there are some lenders that will allow a loan despite having no credit score or history.
Income
Another thing to consider is having a steady income. Lenders tend to impose income requirements to ensure that a borrower has the means to pay off a loan. Income verification, such as income documents and income proof, is often used as a personal loan requirement precisely for this reason.
One quality of a loan is that it's paid in monthly installments. If you don't have a good gross monthly income to make the monthly payments, then a personal loan may not be a good choice for you.
Debt to Income Ratio
To put it simply, DTI is an expressed percentage of a consumer's monthly gross income that goes toward paying debts. This ratio is what helps income lenders determine if a borrower is fit to make payments on new and current debts. Usually, a DTI of less than 36% is ideal.
Collateral
If you're applying for secured personal loans, the loan lenders will have you pledge valuable assets or collateral. A mortgage loan is one of these secured personal loans where you require collateral in case of missed payments. You practically give the lender the legal right to seize valuable assets you've put up as collateral. Usually a mortgage statement with all the information concerning your secured personal loan.
Origination Fee
Many lenders tend to let their borrowers pay for personal loan origination fees. This is an extra fee charged by most lenders for processing an application for a loan. These usually range from 1% to 8% of the total loan amount, depending on the applicant's credit score and loan amount.
Other Typical Loan Requirements
These will be the documents your loan providers will typically ask from you in order for you to fully apply for a new personal loan. Most personal loans will require the following:
Loan Application
The format for this tends to vary; however, you would typically need to provide basic personal information, how much you would want to borrow, and the purpose of the loan.
The type of application usually varies depending on the lender's offer. Some would prefer applicants send in paper applications in-person. online lenders may have your application form completely online, and some may even want to discuss the loan on the phone before deciding on your loan approval.
Proof of Identity
Two forms of government-issued identification are usually required as proof of identity. The acceptable government-issued proofs of identity used to apply for a personal loan are:
- Birth Certificate
- Voter registration card
- Driver's license
- Certificate of Citizenship
- Passport
Employer and Income Verification
Lenders will usually assess your prospects of being able to pay back loans as well as any previous debts you may have. For this reason, lenders usually require prospective borrowers to show proof of their employment status, history, and current earnings. Employer contact information, pay stubs, returns, and bank statements can be of use on this part.
As for prospective borrowers who are self-employed, the documents needed may be different. For self-employed applicants, documents such as credit card statements, bank statements, and income tax returns can be used.
Proof of Address
An additional requirement to apply for a personal loan would be proof of your address, such as a utility bill, a copy of your rental agreement, proof of address, or your property tax receipt. This is for lenders to know if you have a stable living situation.
That's everything you need to know to apply for your very own personal loan. Of course, we at the admin department will do our utmost to ensure your loan application process is smooth and steady, and we will assist you in any way we can.
For more information on Vista Residences, email [email protected], follow @VistaResidencesOfficial on Facebook, Twitter, Instagram, and Youtube, or call the Marketing Office at 0999 886 4262 / 0917 582 5167.
