What is a Personal Loan?
A personal loan is a loan appealing to any individual who is not representing a commercial interest, and is acquiring the principal for them selves. A few examples of personal loans are:
- Mortgage loans
- Car loans
- Home Equity lines of Credit
- Credit cards
- Installment loans
- Pay day loans
In these kinds of loans the credit score of the borrower seeking the loan is a major component in the approval and underwriting of the loan. For most personal loans the monthly payments can be decreased by lengthening the period of time the loan is collecting with most mortgage loans maxing out at thirty years, at the discretion of the lender.
What do I need to Apply for a Personal Loan?
To apply for a personal loan it is key you provide these documents:
- Identification; Normally at least two types including a passport, driver’s license, State issued identification card, or a social security card.
- Verification of Address; whether it be utility bills, recent mail, or copy of the lease
- Proof of Income: W-2 forms, pay stubs, bank statements, or tax returns are accepted by most lenders.
You may also be asked for additional information including:
- Your employers name
- Your work address and phone number
- Gross income
- Monthly debt obligations
- Previous addresses
What to Look for in a Personal Loan?
Be sure to watch out for prepayment penalties within the terms of the contract, these are normally put in place to ensure that the amount the lender ends up with is always the same and covers any interest that you might otherwise escape paying on by paying the full amount early. Also be aware of scam artists, verify the lender with the Better Business Bureau and the Federal Trade Commission before entering into any agreement, as some lenders are recorded for unfair practices.