Personal loans are provided by a wide variety of financial institutions. If you are a member, you could obtain a personal loan at your local credit union. Credit unions are known to offer competitive rates to their customers. You can go the more traditional route for a loan by applying for one at a bank in your neighborhood. Additionally, you may be able to apply for a personal loan from a nationwide bank completely online.
Another option for personal loans can be found in online lenders. Online lenders have become increasingly common in the last decade, making it easier than ever to get some quick emergency funding without ever needing to leave your house. Many online loan providers offer an incredibly simple application process that can be done in one afternoon. All that is typically required is some personal details, identification, proof of income, and a credit check.
Your credit score and proof of income will have an impact on how much you can qualify for, what your terms will look like, and how high of an interest rate you are charged. Your proof of income does not need to be strictly paystubs as the source does not necessarily matter as long as you can prove that you have enough money to repay the loan in the predetermined monthly installments. Your credit score is vital to loan approval and the interest rates you are charged.
Since your credit score is meant to be a general measure of your financial reliability, the lower your credit score, the higher interest rates you will likely have to pay. Thanks to the diversity of online lenders available, no matter your credit score, you will likely be able to find a lender that is willing to work with you as long as you can afford to pay the higher interest rates.
Once you obtain your personal loan, you can use this as an opportunity to increase your credit score through responsible repayment so you can benefit from more competitive interest rates in the future. By paying each monthly installment on time, you will improve your payment history, which accounts for 35% of your score’s calculation. We also recommend that you pay off your loan early, if possible and if there are no prepayment penalties, to save money on interest.