Credit cards aren’t the only option for financing purchases or consolidating debt. Personal loans are a popular choice; they are easy to apply for and get approved. If you’re interested in getting a personal loan, this guide will expose you to How to Apply for a Personal Loan online.
A personal loan is a fund you borrow for just about any purpose, including debt consolidation, a new appliance, an unexpected medical bill, a vacation, or even a student loan. You pay the money back, including interest, in monthly installments over time, usually two to five years; most personal loans are unsecured, meaning they don’t necessarily need collateral.
The interest you pay is an annual percentage rate (APR). The average APR on a personal loan is 8.73%, but it can range from 6% to 36% depending on your creditworthiness, including checking your income, debts, and credit. You can get a personal loan through a credit union, a bank, a credit card issuer, or an online financial lender. You can generally apply online or in person and will have to provide some basic personal and financial information. Your lender will consider your employment status, income, outstanding debts, and overall credit score to assess your eligibility for a loan and determine the interest rate you will pay.
What Documents Are Required for a Personal Loan Application
These are the standard documents required for a Personal Loan online approval:
Documents for Salaried Individuals:
- Identity & Age Proof
- Filled personal loan application with photograph
- PAN Card
- Residence proof such as driving license, Voter ID, post-paid/landline bill, and utility bills.
- A Bank statement for the past 3 months.
- Salary Slips for the past 3 months.
- Form 16 or Income Tax Returns of last 3 years.
Documents for Self-Employed Individuals:
- Identity & Age Proof.
- Filled personal loan application with a photograph.
- PAN Card.
- Residence proof – Passport driving license, Voter ID, post-paid/landline bill, utility bills.
- A Bank statement for the past three months.
- Salary Slips for the last 3 months.
- Last 3 years Income Tax Returns with computation of income.
- Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account.
How does a personal loan work?
If you want to apply for a personal loan, you’ll have to complete an application and wait for approval for a few hours or days. Once approved, the lender will pay the money into your bank account, and you will use the funds for your envisioned purpose. You will also start to repay the money right away. Throughout the loan term, your lender will likely report your account activity to the credit bureaus.
Here’s an explanation of all that makes up personal loans.
- The Interest rates: Personal loans charge borrowers a fixed APR, or annual percentage rate, on top of the loan amount (or principal).
- Monthly payment: Personal loans come with a fixed monthly payment that you’ll make for the life of the loan, calculated by adding up the principal and the interest.
- The Repayment timeline: Repayment timelines differ for personal loans, but consumers can choose repayment timelines between one and seven years.
- The Origination fees: Some personal loans charge an initial origination fee on top of the original amount of your loan. While origination fees vary, it’s common to see origination fees as high as 6 percent of your loan amount.
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How to Apply for a Personal Loan
If you want to apply for a personal loan, take these steps on How to Apply for a Personal Loan.
- Pull your credit: A lower credit score limits your chances of getting approved for a personal loan with the best rates and terms. If your credit score is on the lower end, question any errors on your credit reports and take steps to improve your credit score before applying.
- Pay down debt if you can: A lower debt-to-income ratio can also help you qualify for a loan with good terms. If yours is high, around 45% or more, try to pay off some of your debts or increase your income.
- Get quotes from multiple lenders: Once your finances are in order, get loan quotes from several lenders. Compare loan amounts, APRs, loan terms, and lender reputation.
- Submit documents to your lender: When you pick a lender, you will apply for the loan and submit various financial information and other documents needed. If you don’t have a job, you should be able to show how you plan to make payments.
- Receive the money: If your loan application is approved, the lender should send you the funds within a few business days.
A personal loan can be used for different purposes, from debt consolidation to unexpected doctor bills to taking a vacation. Most personal loans are unsecured because they do not require collateral, making them easy to apply. The best personal loans will depend a lot on your creditworthiness is measured by your credit score and why you need the loan. Personal loans can be an inexpensive way to borrow if you have good or excellent credit. Please ask your questions and drop your view on How to Apply for a Personal Loan in the comment section.
What happens if a personal loan is not paid?
If the borrower fails to pay, the bank charges a penal interest on the overdue amount. Financial lenders usually charge a penal interest of 2%-3% per month of the overdue amount.
Which bank is best for a personal loan with low interest?
The bank best for a personal loan with low interest is U.S. Bank
What is the minimum salary for a personal loan?
The minimum salary requirement will vary from lender to lender.
How can I get a loan online immediately?
Follow the steps below:
- Authenticate Yourself – Instant KYC and with OTP.
- Personal Loan Offer- Set your loan amount and tenure.
- Setup Repayment- set up your monthly installment.
- Sign Electronically- sign the loan agreement.
- Get loan disbursal- Get money in your bank account.
Which bank gives a loan immediately?
HDFC Bank of Nigeria gives loans instantly.