Personal Loans, Lenders Comparison - 2020
Personal Loans: An Introduction → Writer - William Wood
Personal loans offer an alternative to charging expenses on your credit card. While they often offer lower interest rates making them an appealing option for many potential borrowers, there are also a number of other factors to consider when choosing the right loan for you.
Decide how much money you plan to borrow
The type of loan you choose partially depends on how much you want to borrow. Payday loans usually max out at $500 to $1,000 while personal loans from a financial institution can go up to a few thousand. Peer to peer lending sites offer personal loans up to $35,000.
Figure out how long it will take you to pay back the loan
Repayment periods also vary depending on the type of personal loan you choose. Payday loans are typically due two weeks after taking out the loan. Bank loans usually last about two years and P2P loans can last from three to five years. Both of the latter loan types require monthly payments.
Determine your credit range
The amount of money you actually repay depends on your interest rate. The better your credit, the better rate you will be eligible for. You can get a free credit report every 12 months from each of the three credit reporting agencies. While this doesn’t include your credit score, it will give you an idea of what information lenders review when analyzing your loan application. You can also check for any discrepancies or incorrect information.
Get your application materials together
When you’re finally ready to apply for a loan, your lender will require an array of paperwork and documentation. Help speed up the process by gathering some of the basics in advance. Most lenders want to see a minimum of the following information:
- Identification (like a driver’s license)
- Proof of income (pay stubs, bank statements or tax returns)
- Proof of employment (such as your employer’s contact information)
- Debt obligations