Finances / Lifestyle

Personal Loans: 5 Criteria to Know Before Applying

Personal Loans: 5 Criteria to Know Before Applying

When you decide to apply for a personal loan it makes sense to think about every aspect of this financial decision before signing on the dotted line. If you are looking for the best personal loans in Utah, for instance, you will be able to find a deal that meets your requirements. Before you get to that point, there are some important points to check and consider.

Here are some key points to consider before making your loan application.

Check your credit score

You need to know what information lenders will see about your payment history and how much you currently owe in other financial commitments. You will often need to meet a minimum credit score criteria to qualify for a loan. It is a good idea to check what your current score is before you apply for a loan.

The reason you need to check is that making too many applications can have a detrimental impact on your credit score. See what your current score is and check your eligibility for a loan before making an application.

Are you already over-committed?

personal loansYou need to be sure that your debt-to-income ratio is acceptable. What this means is that your income is more than enough to cover your existing payments and there is room to increase your repayments when you take on a new loan.

As a general rule, your debt-to-income should be less than 35%. Work out how much you pay each month compared to what you owe. This will confirm your eligibility for this important criteria.

Do you know how much you need to be earning?

Many lenders have a minimum income requirement. This is often upwards of $20,000. The problem you face is that each lender is different. If your annual income is above the minimum threshold you may well meet their minimum salary requirement.

What are the fees and loan rates?

Another important aspect of your loan to check before applying is how much a successful application is going to cost you. Check what fees your lender is going to charge and what interest rate they are proposing to charge on the loan amount. The interest rate you pay may change according to what sort of risk the lender rates you as.

Can you provide your identity?

Lenders usually ask for proof of identity and confirmation of your address. Make sure you have all the required documents to hand and they are acceptable. Your driver’s license needs to be in date and show your current address, for example. The majority of lenders will request two forms of identification and address verification. It will speed up the application process if you have all of the documents to hand ready to send over to the lender.

Your ability to successfully apply for a loan will often depend on your having a good credit score, a steady income, and an acceptable debt-to-income ratio. If you are confident you meet these requirements you should be able to apply for a loan with a degree of confidence that your application will be accepted.

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