Taking out a personal loan can be a simple way to take care of your pressing needs in a timely manner. While applying for a personal loan is a fairly straight-forward process, there are a number of things that you will want to know about and consider before applying. We’ve put together this list of steps that cover the personal loan process.
Let’s take look at the main steps for getting a personal loan and then go into each one in more detail:
1. Figure out your needs and credit score
2. Decide on a loan type
3. Apply with a lender
4. Provide the required documentation
5. Accept the terms of the loan and begin making payments
Figure out your needs and credit score
The first step in getting a loan is figuring out the amount that you would like the loan to be for. Then, review your personal finances and make sure that you can afford to pay off the loan in a timely fashion.
When determining how much you can afford to pay, you will need to factor in a few things. Some lenders charge an “origination fee” up front to cover the cost of processing a new loan – this is additional money that you will need to pay along with the loan itself and the interest on the loan. So, you may need to set aside extra money to pay this fee at the beginning of your loan. (Note: Sun Loan does not charge origination fees.)
You will then need to use a personal loan calculator to get an idea of what your monthly loan payment will be. There are many free personal loan calculators available online. While the monthly payment amount can vary due to different interest rates and lender terms, it’s best to have a rough sense of how much it will be. For instance, you may be able to use a personal loan calculator to learn that your payment will be between $110-120 per month – although this won’t provide you with an exact amount, it will prepare you for the range your payment may be in.
Checking your credit score before you apply for a loan will give you a better sense of what type of loan terms you are likely to be offered. A free copy of your credit score is available every 12 months. It combines credit data from all three credit bureaus and you can run the report here.
It’s important to note that though credit score is one of the only metrics looked at by most loan companies, we at Sun Loan see you as more than just your credit score. With us, you’ll be assessed on your general ability to repay, which includes additional factors, such as current employment and repayment history.
Decide on a loan type
It’s time to explore your loan options and figure out the type that’s right for you.
While some loans, like personal installment loans from Sun Loan, can be used for nearly everything, other types of loans are only granted for specific needs.
Here are some of the ways you would be able to use a personal installment loan:
- Debt consolidation: Taking out a personal loan to cover other debts allows you to simplify the number of payments you have to make each month, and may also result in paying less total interest than when you had several different sources of debt.
- Home improvement: A personal loan can be a good choice when funding a renovation to your home and may not require that you secure that loan with a form of collateral (such as your house)
- Emergency: If you need money to cover an unexpected expense like car repairs, an emergency loan can help.
- Medical: A personal loan can help you pay for an unpredictable medical issue.
- Vacation/wedding: Weddings and vacations can require an upfront payment, and a personal loan is helpful in that it allows you to pay this money now and then pay it back slowly over time.
Apply with a lender
Once you’ve found the lender that you want to go with, it’s time to apply. Some lenders like Sun Loan let you complete the application process online, over the phone, or in person, while others limit you to a single option.
Provide the required documentation
Just like the application process can vary from one lender to the next, the documentation required for a loan can vary as well. Loan companies commonly ask for documents like proof of residence, a copy of your driver’s license, or pay stubs to provide proof of income.
If you’re applying for a personal installment loan at Sun Loan, we will require a valid ID, proof of income, and proof of residence.
Accept the terms of the loan and begin making payments
Once you’ve been approved by the lender, they will then have you accept the terms of the loan and sign all the paperwork. Be sure to read everything clearly and ask any final questions that you might have. Once the loan is finalized, you can receive payment as soon as the very same day. Congrats!
To avoid missing payments, it’s a good idea to mark on your calendar when the payments are due each month. You also might want to set up automatic payments – that way, you will have peace of mind in knowing that you won’t make any payments late. If your situation changes and you have more money available, it’s not a bad idea to pay more than the minimum monthly payment for your loan. By paying more than the minimum, you will decrease the total amount of interest that you pay on the loan over its lifetime.
Sun Loan makes personal loans easy.
Now that you know how the personal loans work, you’re ready to begin the process yourself! Sun Loan makes taking out personal loans simple and timely. Find out if our personal installment loans could be a good fit for your needs.
