6-Step Guide to Getting a Personal Loan
What's the process for securing a personal loan?
Life can throw unexpected expenses in your way without warning and paying for costs you hadn’t budgeted for can be tough. Everyone needs help sometimes. You might find some financial relief with a personal loan in an emergency.
Applying for a personal loan — or any loan, for that matter — can seem intimidating. However, when you get right down to it, getting funds through a personal loan is a lot easier than you might think. This guide details the personal loan process in six simple steps.
6-step process to taking out a personal loan
- Determine if a personal loan is right for you
- Decide how much money you need
- Prequalify for a personal loan
- Compare loan options
- Choose a lender and apply
- Receive loan approval
Step 1: Determine if a personal loan is right for you
There are a lot of ways to borrow money, but not all of them make sense in every situation. Options include taking out a personal loan, getting into a HELOC or cash out refinance on your home, or using credit cards.
A personal loan may make sense for your needs if you want additional financial flexibility, are looking for an interest rate that may be lower than most credit cards or want to borrow money without putting up collateral.
Homeowners with equity can consider a HELOC or cash-out refinance, but those options take time to secure, and require using the home as collateral. These options aren’t always ideal for everyone.
Credit cards are another option, but they often come with higher interest rates than most personal loans. In fact, that’s one of the biggest benefits of personal loans as often personal loans, including Guaranteed Rates', have fixed not variable rates. If you’re deciding between taking out a personal loan or using a credit card, think about how interest rates will affect what you owe in the long run, and what the potential savings could look like over time.
Credit card debt can also make it hard to plan ahead. With a personal loan you will have personalized repayment terms to help pay down your debt, manage your budget and achieve your goal of being debt-free
Step 2: Decide how much money you need
When you apply for a personal loan, you have to state exactly how much money you’d like to borrow. Personal loans are paid in a lump sum and can be used for almost any purpose, so do some planning to determine how much cash you need.
Having a specific dollar figure in mind will also help when it comes time to shop around and vet lenders.
Depending on your financial circumstances, some lenders may offer higher loan limits than others, so it’s best to plan and know exactly how much money you’ll need.
Step 3: Pre-qualify for a personal loan
By prequalifying for a personal loan, you’ll be able to see what interest rates you’ll likely be charged and the amount of money that each lender is willing to lend.
Some lenders may require a credit check to provide that information, but Guaranteed Rate personal loans only use a soft credit pull when reviewing preliminary loan terms. That means you can prequalify for a personal loan while also checking your maximum loan amount and interest rate — all without affecting your credit score.
Step 4: Compare loan options
You’ll need to carefully review available loan options and financing terms to pick the right lender and loan to suit your needs. Some of the more important loan terms to consider include:
● Personal loan amount
● Personal loan rates
● Amortization schedule
● Additional fees
Personal loan amount
No doubt your biggest concern when taking out a personal loan is how much money you’ll be able to take out. Your current financial qualifications and debt level will determine how much money lenders will be willing to extend to you.
Personal loan rates
Unlike mortgages or auto loans, interest rates on personal loans can vary significantly from lender to lender and borrower to borrower.
According to the Federal Reserve, the average APR on this type of loan is 9.09%. If possible, look at both the APR and the interest rate. APR can be a more accurate reflection of the total cost of the loan since it accounts for additional costs like origination fees.
From the moment the funds land in your account, you’ll be expected to start repaying your personal loan. Amortization schedules are structured like any other type of loan with monthly installments for a set period until the loan is completely paid off.
You might have to dig into the fine print to find them, but sometimes personal loans will come attached with extra fees which can change how much a loan costs.
Step 5: Choose a lender and apply
Once you’ve done your research and found the right lender, it’s time to submit a loan application. The amount of information you’ll be asked to submit isn’t that different from a credit card application. Basic details like your income, desired loan amount, monthly expenses and employment status will often be all that is required. In most cases you’ll also need a social security number to validate your identity.
Today’s digital application processes are a breeze to run through. Applying for a Guaranteed Rate personal loan could take as little as 10 minutes.
Step 6: Receive your funds
Since many online lenders can review applications and decide in minutes, getting your hands on your money should be fast too.
With a Guaranteed Rate personal loan, you’ll see funds land in your account within 1-to-2 business days. A quick time to fund means you can get the money you want without waiting on drawn-out underwriting processes.
Where can I find personal loan options?
Don’t let credit card debt, financial emergencies, or big-ticket purchases mess with your budget. A personal loan from Guaranteed Rate can help you cover those costs without putting a crimp in your finances or your standard of living.
Do you want to learn more? Check out the personal loan options available to you.
Personal Loans Terms and Conditions: Eligibility: You must be 18 years of age or older. To qualify, a borrower must be a US citizen, a permanent resident, or a non-permanent resident in the US on a valid, long-term visa. All loan applications are subject to credit review and approval. You must meet our minimum requirements established for this offer including, but not limited to, credit history, debt-to-income, and application information. Offers may be subject to income and employment verification.
Rates and loan amounts: Your actual rate depends on your requested loan amount, loan term, creditworthiness, income, and a variety of other factors. Interest-rate caps and loan amounts may be lower in some states due to legal requirements and may impact your ability to qualify for a Guaranteed Rate personal loan. The lowest rate advertised is reserved for the most creditworthy borrowers.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate. Guaranteed Rate its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.