Personal loans: What do I need to apply?

Simple tips for applying for a personal loan.

There are so many reasons to decide to get a personal loan — debt consolidation, appliance purchases or repairs, expenses for a wedding, auto repairs, medical expenses, or maybe a dream vacation.

Personal loans can be a fast and simple solution for your needs and offer more appealing interest rates and terms than credit cards or title and payday loans. Applying for a loan can be an easy process, especially if you know what to expect.

So, what do you need to qualify for a personal loan?

Before a lender, such as a loan company, credit union, or financial services institution, can consider whether you’re a good candidate to borrow money (and pay them back), they will need to evaluate your financial situation.

The first steps of your loan application will require documentation that proves your identity, employment, and address. To simplify the application process, be sure to gather up these documents before you apply.

In the digital age, you may find that you can prequalify or book your loan via an online process on the lender’s website. Having the documents below on-hand before you start will ensure that you have all of the information you need.

There are a number of ways to provide documentation. Different financial institutions may have additional requirements, but the following are standard.

Proof of identity

You may need to provide two of the following documents

• A current driver’s license
• A Social Security card
• A state I.D. card
• Your birth certificate
• Your passport
• Proof of citizenship
• A military I.D. card

Proof of employment or income

If you’re traditionally employed:

• Your paystubs
• Your tax returns
• Your bank statements
• Your W-2s and 1099s
• Your employer’s contact information and manager’s name (The lender may call to confirm your employment.)

If you’re self-employed:

• Your bank statements
• Your 1099s
• Your tax returns

Proof of address

You may need to provide two documents with your full name and address

• Your I.D. card with current address
• A current utility bill
• A mortgage statement
• A leasing agreement
• Your voter registration card

What else will your lender need to know about you?

Be prepared to answer some basic questions when starting the loan process. Your answers are not only important for the loan company, but they will also give you a clearer picture of the commitment of which you’re entering.

• What is the loan amount you need?
• In general, how will you be using it?
• How much can you afford to pay each month?
• How many months will you need to pay off the loan?

Bear in mind, you are not only paying for the loan amount, but also the lender fee and an annual percentage rate of interest (APR) on that amount. (Think of the interest rate as paying rent on the money you are borrowing.) Ask if there are any additional fees, such as origination fees.

The first step to applying for a personal loan is to prequalify. This is quick and simple and does not affect your credit report or score.

It’s always a good idea to review your credit report and your credit score before applying for a loan. You’ll avoid being surprised by anything your prospective lender sees when they examine your credit report. Checking your credit report will not affect your credit score, so you can feel free to check as often as you’d like. Getting a personal loan and paying it back on time can help improve your credit rating.

Your lender will examine your credit history and your debt-to-income ratio (DTI), which compares your monthly debt payments (such as auto loans and student loans) to your gross monthly income.

Secured personal loans, which require collateral (something of value that the lender can sell to pay off your loan if you fail to make your payments), can often be obtained at a lower interest rate than unsecured loans, which do not require collateral.

The information and materials provided on this website are intended for informational purposes only and should not be treated an offer or solicitation of credit or any other product or service of Buckley Microfinance or any other company. This website may contain links to websites controlled or offered by third parties. We have not reviewed all of the third-party sites linked to this website and are not responsible for the content, products, privacy policy, security, or practices of any linked third-party website. The inclusion of any third-party link does not imply any endorsement by Buckley Microfinance of the linked third party, its website, or its product or services. Use of any third-party website is at your own risk.

References: Accessed March 26, 2021

Advertiser Disclosure What documentation is required for personal loans?

Personal Loans: What to Know Before You Apply

How to Apply for a Personal Loan

How to Apply for a Personal Loan

5 Personal Loan Requirements To Know Before Applying

Free Credit Report