How to Get a Loan: 5 Simple Steps to Help You Take Out Money
As you begin to research how to get a personal loan —and how to take out a loan as fast and painlessly as possible—you may feel that the process is somewhat daunting. There may be several different factors to consider when it comes to taking out a personal loan, but the loan process itself doesn’t have to be convoluted or complicated.
With the right resources, and a foundation for understanding how to get a loan, and how to get a loan fast, the process can be smooth and hassle-free. Read ahead for a straightforward breakdown on how to get a personal loan quickly and efficiently.
Step 1: Get organized
Identify the type of loan you need
As you delve into researching how to get a loan, the first decision you’ll have to make is what type of loan you need. Some different types of loans include home loans, auto loans, student loans, personal loans, and home improvement loans.
Loans can also be classified as secured, unsecured, fixed rate, and variable rate. Deciding the type of loan that you want is a crucial step to moving forward in the process of getting a loan.
Other factors to consider which are equally important include loan amount and your current financial standing. Aligning your loan application with these factors will improve your chance of getting approved.
Gather your documentation
Being prepared can help you find the best personal loan rates as well as take some of the stress out of getting a loan. When you’re considering getting a personal loan, you’ll want to be prepared with the right documentation on hand. In order to get a loan, you may need to submit information pertaining to the following:
- Bank statements
- Tax returns
- Debt payments per month
- Previous addresses
- Employer information
- Driver’s license
- Social security number
Step 2: Get your credit score
As you proceed with preparing on how to get a loan, a key step will be checking your credit score. Although a good credit score is not the only factor in getting a loan, your credit score will play an important role in your chances of obtaining a loan and what interest rates you may pay.
It’s also crucial to identify and remove any errors in your credit history. The act of filing a dispute in and of itself does not change your credit report. However, if a dispute leads to a change in the information used in your credit report, it could potentially have a positive effect on your credit score.
For example, an error in your report which indicated a late payment that is subsequently removed after being disputed would likely improve your credit score. Just keep in mind that information that is corrected but does not factor into your credit, such as your address, will not affect your credit score.
Step 3: Shop Around
Once you have your credit score, you can venture forward on your next step of preparation for how to get a loan that meets your needs—shopping around.
Get pre-qualified for a loan
Some online lenders will perform a soft credit check for pre-qualification, which shouldn’t affect your credit score. A pre-qualification can give you vital insight into the type of loan and loan terms that you can expect. It’s important to note that some factors may reduce your chances of getting prequalified, such as income that is too low or too many recent inquiries into your credit history.
It’s best to compare loan terms from various lenders before submitting an application, so take your time! Be sure to take note of whether a lender has eligibility criteria for a loan, which refers to basic requirements that have to be met in order to proceed with an application. Ensure that your finances meet these basic requirements prior to submitting your application to save time and improve your chances of getting your application approved. Normally, when you submit and complete an application you will be asked to agree to pull your credit, this is referred as “ hard credit pull”, at his point you need to be sure you want to proceed with the lender because the hard credit pull can impact your credit score.
Analyze the details
Read the fine print and compare loan terms on several different factors. Pay attention to details such as the following:
- Additional fees or penalties, such as prepayment penalties. Prepayment penalties, sometimes called exit fees, are fees that a lender may apply if you pay off your loan before the loan term ends.
- Interest rate
- Duration of the loan
- Monthly loan payment
- Maximum loan amount
- Minimum loan amount
Step 5: Submit your loan application
Having researched how to get a loan that works for your needs and following the above steps, you can make a decision on which lender is right for you. Once you’ve decided on a lender, you can submit your application. The lender will submit a hard credit check to move forward with your application, which may affect your credit score temporarily.
You can expect to receive the loan amount within a week or so, for a typical lender. If you find yourself in the situation of being denied a loan, don’t be disheartened. Ask for details on why your loan was denied for future reference, so you know what steps you can take to improve your application to other lenders.
Applying for a loan doesn’t have to be a stressful process. Now that you have more information on how to get a loan, you have a running start. Take time to go over the details, ask questions, and review your needs. Your preparation, including using this step-by-step guide for how to get a loan fast, will provide you with a solid footing for getting the right loan in a timeline that meets your needs.
Please consult with your attorney, financial consultant/planner, accountant, and/or tax advisor for advice concerning your particular circumstances. The information contained herein is for general informational and educational purposes only and should not be construed as professional, tax, financial or legal advice or a legal opinion on specific facts or circumstances. The information or opinions contained herein should not be construed by any consumer and/or prospective client as an offer to sell or the solicitation of an offer to buy any particular product or service.