Get an installment loan from your bank
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- If you want to apply for a bank loan, the first thing to do is check your credit.
- Next, you will need to find out if your bank offers personal loans. Typically, to get a bank loan, you must be an existing customer with good credit.
- If your bank offers loans, you will need to gather your paperwork, clarify the terms of the loan, and make sure you have a plan to pay it off.
- If your bank doesn’t offer loans – or even if it does – you might want to get quotes for comparison from online lenders, who have fewer regulations and can base their offers less on. your existing credit and more on your repayment capacity.
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Whether it’s a personal loan to buy a car, consolidate debt, finance a business, or do home renovations, applying for an installment loan from a bank can be a way to build your credit and pay it off. which you need.
To get a personal loan from a bank, you’ll usually need to be an existing customer with good credit, says Jamie Young, personal finance expert at Credible, an online loan marketplace.
“If you’re doing business with Chase, Bank of America, or Capital One, you’ll have to look elsewhere – they don’t offer personal loans,” Young says. “Goldman Sachs Bank offers an online application process through its Marcus brand, and it’s also easy to apply for rates through SunTrust Bank’s online lending division, LightStream.”
Note that banks face more regulations than online lenders, so “as a result, they apply the highest lending standards,” says Priyanka Prakash, loan and credit specialist at Oakpark financial. “Online lenders are much more flexible. They place less importance on credit and more on your ability to repay a loan. That means income is more important.”
Or, you can use a personal loan market like Credible to request rates from several lenders at the same time.
How to get a bank loan
1. Check your credit score
If you are starting the loan process for the first time, get your loan first. credit score.
You can check it for free anytime on sites like Credit Karma, Credit Sesame, and Credit.com. You don’t need a perfect credit score of 850 to get a loan, but lenders take your credit score as an indication of your reliability as a buyer and adjust their offers accordingly – so the higher your score, the better.
2. If something is wrong, remove your credit report
Your credit score is a three-digit shortcut for the information on your credit report, which monitors all of your credit-related activities. According to the Federal Trade Commission, you have the right to a free copy of your credit report every 12 months from each of the three national credit reporting companies: Experian, Equifax and TransUnion.
Note that there are many options for paying your credit report, but annualcreditreport.com is the best place to get your free report (or call 1-877-322-8228). Be prepared to provide your name, address, social security number and date of birth to verify your identity.
2. Know that loans can actually improve credit scores
If you want to take out a loan for consolidate credit card debt, or paying off debt faster, it can help you in more ways than you might think.
“Taking out a personal loan to pay off high interest credit card debt can improve your credit score by lowering your credit utilization rate,” Young says. “This is how close you are to reaching your limits on your credit cards. Try not to use more than 30% of your limit on any card.”
Also, if you haven’t taken out an installment loan like a car loan before, adding a personal loan to your credit mix can increase your credit score. “It’s because your credit mix makes up 10% of your credit score,” she says.
3. Understand that there are types of installment loans
There are two types of personal loans: secured and unsecured.
Unsecured loans are not backed by collateral like personal property or a house. A bank assesses whether to grant you the loan based on your financial history and credit score.
If you don’t qualify for an unsecured loan, lenders also offer secured options, which can be used against assets or accounts you have in the bank, or something more tangible, such as a house or a home. car. Mortgages, home equity loans, and auto loans are considered secured loans because you are providing collateral.
Remember, if you take out a secured loan using your house, car, or anything else as collateral, you run the risk of losing everything you’ve borrowed if you become unable to repay your loans.
Most of the lenders who offer unsecured loans, including banks and
, will also offer secured loans.
4. Make sure your bank offers installment loans
Like Jamie Young from Credible said above, to get a personal loan from a bank you will usually need to be an existing customer with good credit. Some banks don’t offer personal loans, so you’ll want to know what your bank is offering.
If your bank doesn’t offer loans – or even if they do – you might want to get quotes from online lenders, who have fewer regulations and can base their offers less on your existing credit and more on your repayment capacity. Online lenders can be an alternative to bank loans or a basis for comparison.
After checking the rates offered by online lenders, check here the best installment loans.
5. Put your papers in order
One of the most difficult aspects of obtaining a bank loan is the amount of documents required in the process.
“Getting a bank loan can take weeks or even months. The main reason it takes so long is that you have to submit a bunch of documents,” says Prakash of Fundera.
The nature of the paperwork will vary depending on the type of loan you are applying for, but in general you can expect to need:
- pay stubs / proof of income
- the last years of tax return
- documentation of 401 (k) s and other financial accounts
- ID photo
- rent / mortgage history
- proof of collateral, if you are looking for a secured loan
It is a good idea to put these basics in order before applying for the loan, in order to speed up the process.
6. Try to get pre-approved
Although this is not a solid guarantee, pre-approval it is when a lender makes an informal offer on a loan, pending full approval.
In this case, the pre-approval will tell the borrower the loan amount, terms, and repayment schedule they are likely to be entitled to in advance. In addition, a pre-approval recognizes that the borrower has met the bank’s general eligibility conditions.
The process usually includes an application and a credit history assessment, and while this is an interesting step to take, it is not a guarantee that the bank will extend these exact terms when issuing a loan.
7. Know the terms
Personal loans are installment loans that is, when you borrow a fixed amount and pay it back with interest in monthly installments over the life of the loan.
Loan terms are expressed in months and can range from 12 to 96 months. When you meet the loan conditions, that loan is considered closed. If you need more money, you must reapply for a loan.
8. make a plan to pay it back
Once you’ve got your loan, make sure you have a plan to pay it off. How much will you owe per month? Are you planning to pay the minimum required or make additional payments and pay it back faster? When is payment due?
Consider setting up automatic payments from your checking account after your paycheck is cleared, or calendar reminders to make sure you never miss a due date.
“Your payment history represents 35% of your credit score,” says Young of Credible. “If you continue to make payments on time and reduce your total debt, your credit will improve” – and the next time you want to borrow money, it will be easier.