Personal loans are the loans that consumers receive when they borrow money from lenders to pay for their personal expenses. The borrowers then pay back the loans with fees and interests. Before you apply for a personal loan, however, you need to check whether you are eligible for one. You can do this by comparing the lenders that are available in your area. Once you have found a match, you can then proceed to get all the necessary documents in order and fill out the application forms.
The period between the submission of your application for your installment loans online and the time the lender gets back to you varies from one lender to another. It can be anywhere between a couple of hours to a couple of weeks. But once your application has been approved, then the funds should be wired into your personal bank account shortly. And soon, the repayments should start as well. Your loan account is only closed once you have successfully paid off the total balance plus any interests and fees.
So, what are the personal loan processes that you need to adhere to for you to successfully get approved? Here is a list of some of the steps and processes of how a personal loan works.
- Loan choice
Before you apply for a personal loan, it is vital that you, first, find out the right personal loan that you want. Choosing the right loan type depends more on what you need to be funded. Personal loans come in four different types:
- Car loans
- A personal line of credit
- Unsecured personal loans
- Secured personal loans
- Eligibility
After determining the type of personal loans to apply for, you then need to check whether you are eligible to get the loan. Lenders have set their own minimum eligibility criteria that you must meet for you to qualify for their personal loans. Most lenders, however, require consumers to meet similar baselines. Some of the minimum requirements touch on age, income, employment, residency, credit score, etc.
Most lenders focus more on credit score and income more than the other requirements. But, to be on the safe side, you may want to ensure that you meet all of the requirements to successfully get a personal loan.
You should also know that meeting all of the lender’s requirements doesn’t automatically mean that you will be approved for a loan. Meeting the minimum set requirements only improves your chances of landing yourself quick loans bad credit.
- Application
Once you have determined that you meet the minimum requirements for the personal loan type you wish to apply for, the next step is to make your application. The application processes of personal loans differ from one lender to another. Most lenders also offer the option of applying for a personal loan on their online platforms. But you can also make your application over the phone or at a branch. Different lenders also require different documents from the borrowers for them to qualify you for personal loans.
Some of the documents include:
- Government-issued ID card
- Proof of income
- Other financial documents like bank account statements and tax returns
- Social Security Number or Tax Identification Number
- Approval
After applying for, and submitting your application form to the lender, you then have to wait for their response. Some lenders may give you an answer instantly whereas others can take a couple of days or even weeks before you get a response from them.
- Loan funding
If your lender approves your personal loan application, then the money should be funded to your account. But this depends on the type of personal loan you applied for as well. If, for example, it was a car loan, then the lender may send the funds directly to the car dealer. For unsecured loans, the funds are deposited to your personal bank account.
- Repayment
Most of the repayment terms are always monthly. The repayment methods may also vary from one lender to another. Some lenders accept bank account repayments while others use checks and money transfers.
- Loan closure
Your loan account should be closed immediately you finish making your final repayment if you stick to making the payments asset on the loan contract. But if you intend to make early payments, then you should contact your lender to readjust the loan closure dates to match as the date that you make your final loan payment.
Final thoughts
Personal loans take a variety of forms and can be used on almost anything. But as a borrower, you should also shop around and only borrow from the lender whose terms and conditions favor your loan application.