A personal loan is a money you borrow from a bank, online lender or credit union for your personal needs.
It could be for your school fees, a vacation, to clear your medical bill, to buy a new car or house. The lender expects you to pay back the money plus the interest at a given period.
To qualify for the loan, you must have a good credit score and an excellent financial history. In this article, we will discuss a few steps to help you get credit union personal loans among a few other insights.
- Check your credit score
The first thing a lender looks at before issuing a loan is your ability to repay it. Typically, you need to check your credit score before applying for a loan.
Having an excellent credit score gives you a higher chance of getting loan approval with a favorable interest rate. Nonetheless, you still stand a chance of getting a loan even with a low credit score but at a higher interest rate.
So, take time to build your credit score to avoid these high fees. If you find any errors in your credit history, be sure to contact the relevant parties to get them corrected.
- Run the numbers
Once you have checked and ensured your credit score is great, it’s time to consider whether or not you can afford to pay off the loan. Most lenders will consider your general income to determine your ability to pay the debt.
First and foremost, determine how much money you need and how much you will get after the origination fee is deducted. Make sure the money you borrow is enough even after the deductions.
Subsequently, determine how much money you can afford to pay per month depending on the given rates and repayment terms. Running numbers will give you an estimate on how much the loan will cost and help you come up with a budget
- Consider your options
Some lenders may ask you to get a co-signer, especially If you have a bad credit score. The co-signer you opt for must have a great credit history for them to be approved.
Alternatively, if your lender doesn’t allow co-signers or you can’t find one, you can opt for a secured personal loan.
To get a secured loan you must provide a precious asset like a house, title deed, or vehicle as collateral. Keep in mind that the value of the item you provide will determine the amount of money you get.
- Shop around for the best personal loan rates
With so many lenders out there, we recommend shopping around before settling for a particular one.
Different lenders offer different interest rates so, it is essential to compare them and only choose the best. Besides credit unions, you can also get personal loans from banks and online lenders.
Nevertheless, you must be an active member of a certain credit union or bank to acquire the funds. Some lenders will even overlook some missteps if your financial history is great. The best creditors should provide a pre-qualification option to help safeguard your credit score.
- Choose your loan type
There are different types of personal loans available to choose from. We recommend choosing a loan that suits your needs.
Most lenders will want to know how you’re planning to use the money before lending it. However, you may be lucky to find a lender with more flexible terms.
For instance, if you’re planning to use the money to clear your school fees, some lenders may allow you to use the funds for this purpose while others may not. Aside from choosing your loan type, make sure to find a lender who can offer such kind of loan. See this link to learn more https://www.foxbusiness.com/money/5-personal-loans-consider.
- Pick a lender and apply
Once you have done your research, choose a lender with the best rates based on your needs. You can choose to make the application online or visit your bank/credit union depending on what your lender wants.
Although every lender has a different way of doing things, they are all most likely to ask you for your details including your name, I.D, contact info, address, income, and employment details plus the purpose of the loan.
Make sure to read and understand the terms and conditions for the loan including the rates, fees, and duration of repayment.
- Provide necessary documentation
In addition to filling in the application form, you might be required to attach other documents like proof of residence, your national I.D, passport photos among others. In case you’re getting a secured loan, a collateral certificate may be needed. The sooner you present the documents the faster the loan process will be. The type of documents to provide will depend mainly on your lender.
- Accept the loan and start making payments
Finally, when all the documents have been submitted and your creditworthiness is approved, you will need to sign the contracts. Typically, this authorizes the union to direct the funds into your account. This could be in a week or within one or two working days. Click here to read more
When faced with a personal emergency, getting a personal loan might be the only way out. However, you have to make sure your credit score is excellent to avoid being disqualified. Also, find a lender with the best rates depending on your situation. Most importantly, once you receive the money ensure to make prompt payment to avoid hefty fines.