If you find yourself overwhelmed with high-interest credit card debt or need money for a home improvement or other necessity, a personal loan can solve your problem. However, just like with different types of loans, there are certain things you will need to do along the way to get approved for the loan. If you are wondering how to take out a personal loan, here are the steps you will follow.
Gather Your Documentation
Before getting approved, you must gather specific documentation. This may include your Social Security card, proof of income such as W-2 forms or pay stubs, your employer’s name and contact information, and proof of your residence, which can be a lease or utility bill.
Make Sure You Can Afford the Loan
According to the experts at SoFi Invest, always make sure you can afford to pay back your SoFi personal loans before applying for and accepting a loan. Using an online personal loan calculator, you can determine how much your monthly payments will be, which will help you decide if you can afford to pay them off. Also, don’t forget that most personal loans come with an origination fee deducted from the loan, so factor this into your decision-making to ensure you get enough money to meet your needs.
Look at Various Options Personal Loan
If your credit score is low or you have little if any credit history, some personal loans may require you to have a co-signer for the loan. If this pertains to your situation, you may want to explore various online lenders since many of these specialize in working with people who have poor or no credit.
Pick a Lender
After doing your research, pick a lender and apply for your loan. In many instances, you can do the entire application process online. Once you have submitted all required information, the lender will likely do a soft credit check to ensure you are a reasonable risk. While some lenders take a few days to decide, many online lenders will give you a decision within 24 hours or perhaps as little as a few minutes after you submit your application.
Read Over and Accept the Loan Terms
Before you ever accept a personal loan, make sure you take some time to read over and get the loan terms. If you don’t and later find you cannot make the payments on the loan, you could be in for numerous unpleasant surprises. For example, if the loan is unsecured, you could deal with collection agencies or face legal action. So, if you take out a secured loan where you had to put up collateral, you could lose the collateral, so keep this in mind.
Becoming more popular every year as a way to eliminate credit card debt or perhaps pay unexpected medical bills or car repairs, taking out a personal loan may help solve your financial problems.