How to apply for a personal loan online
There are several reasons why you may need to apply for a personal loan online. Maybe you’re starting a new business venture, maybe you want to buy a new car, maybe you’re in the market to buy a home or maybe you want to clean up your personal finances and consolidate debt. Whatever the reason may be, a personal loan can be the solution to help – and applying online can be easy.
Here are four steps to apply for a personal loan online:
Check your credit score
Before applying for any type of credit, the first step is to check your credit score. You can order your credit report with a credit score from Equifax or TransUnion, which are the two Canadian credit bureaus. A credit score is a numerical figure between 300 and 900 that determines your credit worthiness at a particular point in time.
The higher the score, the more likely you are to be approved. Checking your credit score prior to applying for a personal loan online also allows you to correct any incorrect information with your credit history or personal information.
Determine how much you need
The amount of the loan is an important factor in the loan approval process. Applying for a larger loan than you need is pointless because it increases your outstanding debt and your monthly payment obligations. However, applying for a smaller loan amount than you need isn’t very helpful either. That’s why it’s important to research the costs and know exactly how much money you need before applying for a personal loan online.
If you want to buy a car, research the cost of the car you want to purchase and subtract any savings you have for the down payment. The remaining balance will be the amount you need to borrow.
Gather your personal and financial information
When applying for a personal loan, the lender will evaluate your financial situation, including your capacity to repay the loan, and your credit payment history. Having all of your personal information on hand will help the application process go quicker. Lenders will ask for proof of income and employment, at least two years of your residence history and information on your current outstanding credit products.
All of your personal and financial information will be taken into consideration when a lender is evaluating a credit application for approval. Your credit score and payment history will also be deciding factors when determining the interest rate on your personal loan.
Choose a lender
Once you check your credit score, determine how much loan you want to apply for and gather all of your personal information, it’s time to apply for the loan. You’ll need to fill out the terms of the loan, then the lender will evaluate your file and come back with a decision. Once approved, the lender will confirm the monthly payments and interest rate. From there, the money is yours to use as you need.