Compare Personal Loans(1)

July. 02,2020
Compare Personal Loans(1)

How to start your personal loan search

If you're on the hunt for a personal loan, you may be wondering, what is a personal loan, exactly? A personal loan is money you borrow from a lending institution — be it a bank, credit union, or other third-party lender—which you will pay back over a fixed period of time. In today's digital age, there are plenty of reputable online loans to choose from, which can be great when comparing personal loan rates.

There are several steps involved that you'll want to consider when searching for personal loans online. Let's go through each of them:

Step 1: Where to get a personal loan

First thing's first. Where do you get a personal loan? As mentioned earlier in this article, you can obtain a personal loan from a bank, credit union, or online lending partner. A bank is the most traditional route, but credit unions are known for offering more flexible terms and rates.

You can also find personal loans online. It may require a bit more research to ensure they're reputable and safe to use, but they can provide a convenient means to obtaining an online personal loan quickly.

Step 2: Get pre-qualified

If you want to get a quick idea of what kind of loans you qualify for — be it low interest personal loans, small personal loans, quick personal loans, and so on — get pre-qualified.

Many online lending partners can get you pre-qualification rates by conducting a soft credit check, which will not harm your credit score. Some information you may be asked for during this process includes the following:

l  Personal information: such as your name and social security number

l  Contact information: such as your phone number and email address

l  Employment details: such as your employer's name and your gross income

l  Monthly obligations: such as any outstanding student loan debt, rent, etc.

Step 3: Start shopping

Once you have a general idea of what you qualify for and what kind of lending institution you feel comfortable borrowing from, the next step is to start shopping around for the best personal loan companies.

We recommend comparing rates from banks, credit unions, and online lenders to find the best personal loan rates. You'll want to look at important information like APR, loan amounts, monthly payments, and fees.

Step 4: Always read the fine print

If an offer sounds too good to be true, it just may be. This is why it's crucial to always read the fine print and conditions, and carefully review the loan agreement terms. While a lender may offer a great interest rate, they may be charging exorbitant fees, making it more expensive than another lender offering a higher interest rate.

Step 5: What happens after you apply

The entire application process, from approval to funding disbursement can take anywhere from 1 business day, to a week, or longer. Most lending partners will provide you with a timeline for how long it will take to get approved or denied, and how long it will then take to receive funds.

Important terms to know:

Prepayment penalties: A fee for paying off the loan early. Some lending partners will charge you with a prepayment penalty fee simply for paying off the loan earlier than planned. After all, they're missing out on the interest you would have been paying had you not paid the loan off early.

Origination fees: This is an upfront fee some lenders will charge that is essentially a cost for processing a new loan application. They are usually a percentage of the total loan.

APR: The Annual Percentage Rate (APR) is the total yearly interest rate. It factors everything in, including any fees, which is why it's an important item you'll want to look at when comparing lenders.

Late fees: This is a fee you'll get hit with if you are late on a payment. The majority of lenders have some form of late fee, but some offer a nice grace-period before charging you. It's important to know what kind of late fees you may be facing in the case that you're ever late on your payments.