Every year, there are millions of people who take out personal loans. They use these personal loans to pay for everything from emergency car repairs to overdue medical bills.
If you’re in a bind right now and could use a little extra cash in your pocket, you should consider applying for a personal loan. Taking out a loan could provide you with the cash that you need to overcome whatever money troubles you might be facing.
Before getting a loan, though, you should learn about the different personal loan requirements that you’ll face. If you aren’t able to meet these personal loan requirements, you might not be able to get approved for a personalized loan.
Today, we’re going to walk you through the nine biggest personal loan requirements that will be put in front of you. We’re also going to provide you with financial advice all along the way to help increase your chances of getting a loan approved.
1. You Must Be the Right Age
One of the very first things that a lender is going to ask you for when you go to apply for a personal loan is your age. They’re going to do this because you have to be at least 18 years old in most cases to take out a personal loan.
Most people under the age of 18 aren’t going to have a good reason to want to take out a personal loan. But if you happen to be under 18 and you’re considering taking out a personal loan, you should know that most lenders are going to stop you in your tracks right away.
2. You Must Live in the Right Location
Another thing that a lender is going to ask you for right off the bat when you apply for a personal loan is your location. More often than not, you aren’t going to be able to obtain a personal loan if you’re not a legal citizen in your country.
With this in mind, you should avoid even trying to get a personal loan if you’re living in a country where you aren’t yet a legal resident. Your application is almost always going to get denied immediately.
3. You Must Have a Strong Credit Score
Prior to applying for a personal loan, you should always take it upon yourself to sneak a peek at your credit score. If you check your credit score and discover that it’s on the lower side, you’re going to want to work to bring it up before you put in a personal loan application.
A lender is going to want to see that you have a relatively high credit score before they even think about giving you a loan. If your credit score is too low, it’s going to indicate that you might be too risky to qualify for a personal loan.
There are tons of steps that you can take to improve your credit score. You can do it by:
- Paying down some of your debt
- Getting current with some of your debt payments
- Finding errors on your credit report and having them deleted
The higher that your credit score is, the more likely you’ll be to get approved for a personal loan.
4. You Must Be Employed
If you don’t have a job at the moment, it’s going to be very difficult for a lender to take a leap of faith and extend a personal loan to you. You’re going to struggle to repay that loan if you don’t have any money coming in each week.
You’ll need to let a lender know that you’re working right now. You’re also going to need to provide them with the name of your employer and give them more information on how long you’ve been in your current position.
This is one of the most obvious personal loan requirements. But you would be surprised by how many people attempt to get personal loans even though they aren’t employed.
5. You Must Make the Right Amount of Money
To get approved for a personal loan, you’re going to need to do more than just secure a job and work at it for a few months. You’re also going to have to bring in a certain amount of money to entice a lender to give you a loan.
It wouldn’t make a whole lot of sense for a lender to give you a personal loan for, say, $25,000 when they know that you’re only bringing in $20,000 each year. The chances of you repaying that loan in a timely fashion are slim to none.
You might want to think about asking for a raise before you apply for a persona loan or even getting a new job that pays more. It’ll give you a better chance to get approved for a personal loan.
6. You Must Not Have Too Many Other Financial Obligations
Do you already have several other types of loans that you’ve taken out over the course of the last few years? Maybe you have an auto loan, a college loan, and a payday loan that all appear on your credit report.
These loans are going to serve as huge red flags for lenders. They’re going to wonder how you’re going to pay them back when you already have a long list of lenders beating down your door and asking you to pay them.
You should eliminate at least some of your current financial obligations to show a lender that you can handle a personal loan.
7. You Must Have a Loan Repayment Plan in Place
Before you even consider a personal loan from Plenti or another lender, you’ll need to come up with a repayment plan for the loan that you want to take out. Most lenders will let you choose how long you’re going to take to repay them.
Most lenders are going to give you anywhere from 1 to 7 years to repay them. You should think about how long you’re going to need so that you can give a lender a better idea of what they can expect from you.
You should also do some digging into your personal finances to see what actually makes the most sense for you. The last thing that you want to do is tell a lender you’ll only need a year or two to repay them when you really need more time than that.
8. You Must Provide Bank Account Information
Do you not have a bank account set up at this time for one reason or another? That could potentially be more problematic than you think when you’re trying to get your hands on a personal loan.
Many lenders are going to deposit your personal loan directly into your bank account after you provide them with the information for it. They’re also going to withdraw money from your bank account every month as you repay your loan.
If you don’t have a bank account right now, this is going to complicate things quite a bit. A lender won’t be able to send you money or collect money from you with ease. And it could very well lead to them denying your application for a personal loan right from the start.
9. You Must Be Able to Provide Collateral (Only In Some Cases!)
To be clear, not everyone who applies for a personal loan is going to need to provide collateral to a lender. If you have a very strong credit score and a great income, a lender will typically give you a personal loan without any strings attached.
But if your credit score is only decent and your income is average at best, a lender might let you know that you’ll need to put up something as collateral. Collateral can be anything from a car to a boat to even your home.
If a lender does ask you to provide them with collateral for a personal loan, you should make sure that you’re going to be able to repay the loan before taking it out. Otherwise, you could put yourself in a position where you’re forced to give up whatever it is that you use as collateral down the line.
Do You Meet These Personal Loan Requirements? Then Apply for a Loan Today
As you can see, getting a personal loan isn’t going to be as easy as just filling out an application and getting approved. You will have to meet a long list of personal loan requirements before a lender will even think about extending a loan to you.
You should decide whether or not you feel as though you meet the personal loan requirements listed here prior to putting in a personal loan application. You should also take a closer look at all of the personal loan requirements that individual lenders might have in place.
Get more information on taking out personal loans and other types of loans by reading through the other articles on our blog.