9/27/2022
As our productive life progresses, we may build the conditions for greater financing opportunities. Of course, this will depend entirely on whether we have acquired good economic habits and have healthy finances.
A favorable situation will make it easier for you to apply for a personal loan and meet the most frequent requirements.
May interest you: Chase Bank personal loans
In the United States, the requirements to contract a personal loan are not very different from those to request a mortgage. Since it is an unsecured financing, your reputation as a good or bad payer becomes more important. Although the requirements may vary from one lender or bank to another, the most frequent are:
Job type
Working full-time will always be considered more formal and serious than other possibilities. If you are independent or have a part-time job, it does not mean that you will be excluded, but you will have fewer options.
In case you do not have an official job, many entities accept a pension or other government benefit, you just have to show that you can pay with that income.
As discriminatory as it may sound, banks and lenders tend to put a lot of weight into describing what you do. For them, being a dentist or serving tables in a restaurant does not imply the same payment commitment. To avoid non-payment or default, they will cross-reference your salary to verify that your job is not invented.
- Amount: between $ 7,500 and $ 100,000
- Term: between 4 years and 6 years
- Interest: 6.39%
- APR: 6.39%
- Amount: between $ 3,000 and $ 100,000
- Term: between 1 year and 7 years
- Interest: Ask
- APR: 5.74%
- Amount: between $ 7,000 and $ 50,000
- Term: between 3 years and 5 years
- Interest: 8.42%
- APR: 8.42%
- Amount: between $ 3,500 and $ 100,000
- Term: between 2 years and 5 years
- Interest: 8.19%
- APR: 8.19%
- Amount: between $ 2,500 and $ 40,000
- Term: between 3 years and 7 years
- Interest: 7.99%
- APR: 7.99%
Credit Score
The higher your credit score, the better your chances of getting a personal or other loan. It is not a mystery that entities are strictly guided by this factor. However, while having a negative history is concerning, it doesn't mean you lack options for borrowing money.
Some traditional banks may take this requirement too seriously, so a short history (less than 6 months) or a fair/bad score could doom you. Even so, you can always go to an online lender with higher rates and fewer requirements, like Bad Credit Loans. The good thing about a high score is that they can offer you a lower prime or preferential interest rate.
Debt-to-income ratio
The ratio of debt vs. income or DTI (debt-to-income ratio) is another factor that financial institutions take into account. In relation to your personal economy, a high level of debt is not recommended, especially if your income is high too. For example, a 50% DTI for a 60k annual salary means you're paying $2,500 a month in commitments.
As a general rule, this debt-to-income ratio should not exceed 40% so that you have enough cushion if you obtain a personal loan in the medium or long term. As long as this ratio is kept as low as possible, the better your chances of getting approved and it is a clear indication that you have healthy personal finances.
Recurring income
Related to the job you have, for lenders or banks it is always preferable that you have a fixed or constant income. It is a precautionary measure to ensure that you can meet the monthly payment of personal loan.
As you ask for more money, the amount you earn becomes more relevant. In fact, some institutions establish a minimum income limit based on the amount of money you are requesting.
Verification documents
The subject of the paperwork can vary if you choose to do this process through a traditional entity or an online site. When you deal directly with commercial banks, they will require different kinds of collections that are grouped into 4 main categories:
- Request. As it is logical to think, each financial institution has its own format for you to start with the personal loan request.
- Address. Indicating where you live and how long you have been there validates the kind of stability you have at any given time. They can usually ask you for: utility bill, voter card, lease or proof of insurance (car, home or rent).
- ID. In addition to avoiding identity theft, you must prove that you are of legal age (18 or 21), a legal resident or a US citizen. They will ask for valid documents such as a passport, SSN, driver's license, military ID, birth certificate, state ID, or certificate of citizenship.
- Employment and income. If it is an unsecured personal loan, the risk is greater for those who lend to you. That is why they ask you for verification through: pay stubs (at least 2), tax returns (2 years), account statements (2 months), contact information from your employer and W2 + 1099 forms (2 years).
Español: Requisitos para contratar un préstamo personal