Learn How to Apply for a Personal Loan

A personal loan is money borrowed for almost any reason, such as debt consolidation, an unexpected medical expenditure, a new appliance, a trip, or even a student loan.


The interest rate you pay is calculated as an annual percentage rate (APR). As of June 2019, the average APR on a personal loan is 9.41 percent, but it can range from 6 percent to 36 percent based on your creditworthiness, which includes an analysis of your income, debts, and credit score.

You repay the loan, including interest, in monthly installments over two to five years. The majority of personal loans are unsecured, which means they are not secured by collateral.

Learn how to receive the cash you need at best possible rate.

How to Get Approved for a Personal Loan

There are several steps to qualify for a personal loan; the first is to ensure appropriate for you. If you want to borrow money to remodel your home or buy a car, for example, a home equity loan or an auto loan may have a cheaper interest rate. Instead of unsecured personal loans based simply on your creditworthiness, these loans are secured by the home you want to fix up or the car you want to buy.


Although paying for a family vacation or consolidating debt falls under the purview of a personal loan, you may also want to consider a credit card with a 0% introductory APR. If you go that way, make sure you pay off the balance before the 0% rate expires.

Determine the Amount of the Loan

Remember that when you borrow money, you are not simply repaying the original debt. Except that 0% card paid off on time, you must pay interest or “rent” on the money you borrow. There’s no reason to pay interest on the money you don’t need, so borrow only what you need. If you borrow less than you need, you may be compelled to turn to more expensive loan sources at the last minute.

Finally, make certain that you can afford the payments on the amount borrowed. Nothing is worse than overextending yourself financially when the smartest thing to do would have been to wait till your circumstances improved.

Examine Your Credit

Before applying for a personal loan, check your credit scores and request updated credit reports from each of the three major credit reporting agencies—Equifax, Experian, and TransUnion. None of these acts, known as soft inquiries, will have any effect on your creditworthiness or credit score. That only occurs when you request for a loan and the lender conducts a hard inquiry.

By visiting AnnualCreditReport.com, you can acquire a free credit report from each main reporting agency once a year. In addition, a free monthly credit score from one or more of the main credit reporting agencies is provided by many credit card and lending firms.

Understand Your Rights Under Regulation Z

The Federal Reserve Board (FRB) established Regulation Z in 1968, which resulted in the Truth in Lending Act (TILA), which was aimed to protect customers when completing financial transactions. Personal loans are a component of that safeguard. The Consumer Financial Protection Bureau is currently in charge of this regulation (CFPB).

Where Can I Get a Personal Loan?

There are two types of personal loan providers: those with a banking license or charter and those without. The fundamental distinction between the two groups is one of regulation.