5 Must-Known Steps for First-Time Loan Takers

When applying for your first personal loan, there are a few things you'll need to know, both for the benefit of lenders and for your self-awareness.

14:56 24 March 2022

When applying for your first personal loan, there are a few things you'll need to know, both for the benefit of lenders and for your self-awareness.

 

You'll know readily about some of these factors, such as your salary. However, you’ll need to determine your credit score before putting in your loan application.

 

Let's look at what you need to know and why you need to know it before you apply.

 

1. Credit History And Score

A strong credit score and credit history tell lenders that you are dependable in your payment of credit commitments. The higher your credit score, the more likely you will be approved for a loan with the best terms, including a potentially lower interest rate

 

Before applying for a loan, verify your credit score and report inaccuracies that negatively affect your credit score so you can correct them. If your credit isn't in excellent condition, it is advisable to delay applying for a loan and instead strive to repair your credit, which might save you hundreds of dollars in the long run.

 

2. Income

Because your take-home salary impacts your capacity to repay a loan, you'll need to provide evidence of income with your loan application. Employers will want pay stubs, W-2 forms, or a salary letter if you're an employee. Self-employed applicants will be required to provide tax returns for the last two years and bank statements that demonstrate their earnings.

 

To determine whether or not you can afford monthly loan payments, you must first figure out how much money you are taking home each month from work. Remember to consider all of your revenue sources, not just your principal source of income, in your calculations.

 

Using a loan matching service like Viva Payday Loans, you can find respectable lenders without paying additional fees or higher APR. 

 

3. Debt Payments

Your debt is simply one factor to consider. It's also critical to be aware of your recurring monthly expenditure.

 

Paying $4,500 on your bills every single month means you won't be able to take out another loan. A loan application is likely to ask you to identify some financial responsibilities, such as rent or mortgage payments and current payments on credit cards or other debts.

 

4. Applicants And Assets

If you're thinking of taking out a joint or co-signed loan, or even a secured loan, you'll want to do your research.

 

An asset, such as a vehicle or an investment account, serves as collateral for a secured loan. Even though you may qualify for a cheaper interest rate with collateral, you might lose valuables if you don't keep up with repayment schedules. You must provide evidence that you are the legal owner of the listed item on your application.

 

For a co-signed loan, you'll likely have to submit the same information you supplied for yourself, including the Social Security number and proof of income, as you would for any other applicants.

 

People with excellent credit might improve their chances of getting a personal loan by including them on their applications. If individuals default on the debt, they will be held equally liable.

 

5. Employer Contact Details

Potential lenders will almost certainly ask for the contact details of your current employer, as well as the contact information of previous employment. Your current and prior employers come in handy as references to verify your income and employment dates.

 

Bottom Line

The best way to secure a loan is to go straight to the lenders. A wide range of companies provides short-term loans, including payday loans. 

 

In most cases, there are no up-front costs. Some even have early payback options, which may save you money in lower interest rates. 

 

It's simple to see why they're a popular choice for emergency cash because of the readily accessible customer support, reasonable repayment conditions, and less strict qualification criteria.