It’s wise to look into obtaining a personal loan through a bank, credit union, or online lender. It’s possible that with the help of these unsecured loan options, you’ll be able to get over a financial hump, cover an unexpected need, pay off debt more quickly, or make a significant purchase.

Debt consolidation loans, loans for home repair, loans for medical expenditures, and loans for weddings are just some of the many types of personal loans accessible. Even though the application process is straightforward, you should still take the time to learn the specifics before you need them.

But what, precisely, is a “personal loan”?

Personal loans, often called unsecured loans or signature loans, are offered by many different types of lenders online and offline, including traditional banks, credit unions, and online-only finance companies. To pay back the loan and interest, the borrower agrees to make fixed monthly installments. Personal loans are often unsecured, meaning you are not required to put up any kind of collateral like a car or savings account to secure the loan.

As of January 25, 2023, the average interest rate for a personal loan might be anywhere from 10.6 percent to more than 30 percent, depending on the lender. If you are approved for financing, the interest rate you are given will depend heavily on many factors, including your debt-to-income ratio (DTI) and credit score.

Any purpose, from paying off high-interest credit cards to funding a long-awaited home improvement project, is fair game for a slick cash loan. But there are certain loan companies that won’t allow you use the money for things like college tuition, a down payment on a house, or investments.

What information do you need to know before applying for a loan?

It’s important to be well-prepared before applying for a personal loan, and that includes gathering all the documentation and information you’ll need. If you follow these steps, you’ll breeze through the process and obtain your money as quickly as possible.

Here are some examples of items you could need:

Two forms of identification are needed, and these may be driver’s licences, state ID cards, military IDs, proofs of citizenship, Social Security cards, birth certificates, or passports.

Employer-specific information such company name, supervisor’s name, and phone number

If you need to provide evidence of residence, you may use documents like a recent utility bill with your name and address on it, a lease agreement, a mortgage statement, proof of insurance (for your automobile, your home, or your rental), a receipt for property taxes, or your voter registration card. The following are some more examples of acceptable evidence of residence:

Methodical instructions for securing a private loan

You may need a personal loan to cover emergency expenses like medical bills or car repairs. To apply for a personal loan, if that’s the kind of finance you’ve decided is most appropriate for your requirements, you’ll need to complete the following eight steps.