People obtain personal bank loans for several reasons. They might want to start a business, pay for a wedding, or get funds for medical bills that are due. Before applying for personal loans, a person should ask himself if he will be able to repay the loan because if it goes into default, his credit score suffers. Here are some tips on obtaining a personal bank loan:
Start with credit review
Lenders will review an applicant's credit score and report so it is a good idea for a person to get credit reports from all three credit bureaus; Equifax, Experian and TransUnion. The applicant needs to dispute any errors on the reports and pay down as many of his current debt as possible. When this happens he increases his chances of getting the bank loan.
What about those with bad credit?
Those with bad credit may still be able to obtain a personal bank loan. Credit unions are excellent places to get loans because they do not charge high fees and the requirements for the loan are not as strict as regular banks. Another idea is to put something valuable, such as a car or home as collateral in order to get the personal bank loan.
Seek out banks with lower annual percentage rates
Another way to obtain a good personal loan is to shop around and compare banks' annual percentage rates. Those who are loyal customers to their banks and who also have other services with those banks might qualify for bank loans with discount rates. It also helps to read reviews of different banks by consumer agencies before choosing a bank to borrow from.
Proof of income
Another requirement for obtain a personal bank loan is to present proof of income. Lenders want to know if applicants have a steady work history because this helps them figure out if applicants will repay the loan in a timely manner. This is why it is not good to apply for a loan when switching jobs or if the person's income is irregular.
Get a co-signer
For some applicants, having a co-signer can help them obtain the bank loan. Keep in mind that if a person defaults on his loan, the co-signer will still be responsible for paying on the loan. The potential co-signer needs to be sure that the applicant is trustworthy.
Get referrals
When applying for bank loans, it helps to get referrals from those who are serviced by the lender. Those can be friends or relatives and they might be willing to speak on your behalf regarding your ability to manage finance well.
Stick with fixed rate loan
Adjustable rate loans might start off as low but this rate might increase during the length of the loan depending on the real estate market. It is better to get a fixed-rate personal loan since you would pay the same interest rate each month.
Obtaining a personal bank takes preparation and a good credit history but with the above mentioned steps, the applicant will get approved.