A personal loan is a type of loan that you can take from the bank. You can use this loan for general purpose and to cover your immediate expenditure such as debt consolidation, paying for an unexpected and sudden expenditure or paying for a small home renovation or project. The approval of personal loans has a very strict procedure and qualification requirements. So make sure you know all about how to get a personal loan before applying for the same.
Documents that you may need for applying the personal loans are as follows-
- For identification you may have to provide the bank a copy of your passport, social security card, state Id or driving licence.
- For the verification your address you may have to provide the bank with a copy of utility bills, copy of lease or mails.
- As a proof of your present or past income you may have to provide the bank with a copy of W-2 forms, tax returns, bank statement or pay stubs.
The bank before approving your personal loan, may ask you about details on following issues-
- Social security number
- Monthly debt commitment such as student loan or rent.
- Gross income
- The name of your employer, phone number and address
- Your email Id, phone number and address
- Previous address
- Date of birth
- Mother’s maiden name
- College information
After providing all the documents and information required by the lender, you have to specify the amount of money you want to borrow and how much time you require to pay it back.
You can get a 0 percent interest rate on your personal loan if you have a good credit and qualify the terms and conditions put up by the finance organization or bank. You can also get a low interest rate on your personal loan if you chose for secured loan instead. You can use your house as collateral, as home equity line of credit or home equity loan is cheap, but also keep in mind that if you are unable to pay back, you could lose your house.
Read the terms and conditions of your personal contract carefully before signing it. There are certain points for which you should look out before applying for a personal loan:
- You must always check if there is a penalty for paying off of your loan before a certain date. Although most of the online lenders do not charge for it but you must always check for ‘no prepayment penalty’.
- Many of the online lenders ask you to apply for automatic withdrawal instead of payment by check from your bank account and to make you chose this option, they may offer you a low APR. If you opt for automatic withdrawal from your checking account, you may have to suffer from account overdrawing and payment of an overdraft fee.
- If you are applying for personal loan online, make a complete background check of the organization, check if it has a history of unfair practises or charges for unreasonable rates.