Things You Must Know before Applying for a Personal Loan

Planning to buy your son a new Mac book on his 18th birthday? Thinking of gifting dear wife an expensive solitaire this anniversary? It is these little moments and fulfillment of the dearest desires that make life worth living. But the money issue can ruin these little moments. Don’t let finances spoil your dream moments. Wondering what to do? Well, the lenders are ready with personal loans. Yes, you can apply for such a loan to fulfill the most private ambitions you have.

Why is it advantageous?

An example would make it much easy to understand. For instance, education loan – you know how cumbersome is the whole process of getting the same sanctioned. Numerous forms have to be filled up, too many documents to be produced. You also have to provide suitable collateral; in a nutshell, too many things to be done before you get the cash in hand.

Actually, even the lenders can’t help it. In most cases, the amount involved is so huge that without checking and cross checking your ability to repay, the lender won’t sanction the loan. In sharp contrast, personal loan amounts are usually moderate. Hence a scrutiny of the borrowers’ credit record is good enough for the lender.

Who offers a personal loan?

When you’re contemplating applying for a personal loan, there is no shortage of lenders. Most, if not many offer such loans, in fact there are a good number of schemes that you can choose from. What is perhaps even more convenient is that there is the option of online application. In case of online cash loans, verification is done over the phone and the relevant documents have to faxed, of course you have to fill up an online application form to begin the entire process.

However, it is suggested that you approach a lender who knows you well, that is you have an existing or a past relationship with the latter. Such a lender would know your credit history as well as you do and the lender would know whether or not you’re reliable as far as repayment is concerned. A pre-existing relationship improves the chances of approval. Besides, there is the scope to further improve the bonding by on time payment of interests and other dues.

Which points a lender considers?

What is that the lender looks at? The answer would be your income status. This is the first and foremost document to be scrutinized. Credit score is also important to some extent, though, not mandatory.

Usually no security or collateral is needed and so personal loans are often referred to as unsecured loans. This is not same as like short term loan.

The lending institutions look at a couple of other things and those are,

  • Your source of income, how stable the source is. It is preferred that you stick on to a job for a good period of time before applying for the loan.
  • Another thing that is scrutinized thoroughly is how much and what assets you own.

Undoubtedly the entire arrangement is really convenient. If you have a steady source of income and at least a moderate credit score, then you’re very likely to be eligible for short-term personal loans. However, such a loan is expensive – the interest rates charged are pretty high. Therefore, apply for one only when it is absolutely urgent.