4 Tips to Minimize Delays in Your Personal Loan Application

You can minimize delays on your personal loan application by understanding how personal loans work, knowing what your personal financial situation allows you to afford, choosing the right lender for your specific need and being prepared for filing your application. The following items will define personal loans, outline advantages of various lenders and give information on how to be ready to apply.

Understand Personal Loans

Unlike a home or auto loan, a personal loan typically is an unsecured form of lending. That means in the personal loan application process, you will not be required to put down anything as security. All lending entails risk for the lender - risk that you will not pay back the loan. The higher the risk perceived by the lender the higher your interest rate and payments.

A personal loan is for a relatively small amount of money, typically around $1,500 to $2,500; is for a short time period, usually a year to 18 months; and carries a higher rate of interest than traditional loans. Personal loans often are for short-term, unexpected or emergency needs. The application process is simplified, often requiring no credit check, and the loan can be funded in 24 hours. There are secured personal loans as well, which typically have lower interest rates, but, of course, require that you put up money or personal property as collateral.

Know What You Can Afford

While personal loans are designed - and priced - to be easy to obtain, your personal loan application must reflect adequate personal financial stability to support your monthly payments. You can speed the application process by only applying for a loan for which you can qualify. The clearer you are as to what payment your income will support, the faster your personal loan application can be approved. Consider a pre-qualifying phone call to your lender, briefly outlining your income and obligations, to get a general idea of the loan amount and terms you can expect to qualify for.

Choose Your Lender

There are finance companies that specialize in personal loans, but banks and credit unions offer them as well. If you are in an emergency situation; have mixed or poor credit; and have no relationship with traditional lenders in your community, a finance company can be the quickest route to an approved loan. Be aware that finance companies typically charge higher interest rates and have more stringent loan terms and penalties.

If you have a relationship with a local lender or a stronger financial statement, consider a bank or a credit union. Often they can offer you a larger loan amount over a longer period of time with a lower interest rate. This could result in a lower payment than a finance company would offer but for a larger loan. You’ll likely be paying a larger total amount of interest over the life of loan, but it may be more manageable for you.

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