A personal loan is often a lifesaver. It’s one of the easiest ways to source funds for your urgent financial needs. But there are a whole lot of personal loans out there, offered by several lenders. How would you determine which one’s best for you? Prequalification is the answer. With many lenders competing in the market, a prequalification is a great tool that helps you compare loan offers from various lenders. However, not many borrowers have been taking advantage of this tool. A US News Survey reveals that only 21% of respondents compared rates offered by multiple lenders. So if you are considering personal loans, make sure you get prequalified for one.
Steps to Get Prequalified Personal Loan Offers
Prequalification is usually a quick process. It merely involves providing your basic personal information to the lender. However, to land the best deal, you should be able to compare multiple lenders and their personal loan offers. And here’s how to achieve it:
Step 1- Analyze your financial situation.
Your income, existing debts, and other liabilities are of interest to lenders. These are the primary factors that affect loan approval. A thorough study of your financial situation will help you prepare yourself for prequalification.
Step 2- Review your credit score.
For lenders, your credit score is a reflection of your financial behavior. Therefore, a good credit score is always a plus. This doesn’t, however, mean that if you have a poor credit score you cannot qualify for a personal loan. Knowing your credit score helps you work towards improving it so that you have a better chance of getting prequalified.
Step 3- Be prepared with relevant documentation.
For getting prequalified only your basic personal details such as your name, address, and income are required. However, you should be able to provide all relevant personal and financial documentation to lenders for the approval process. So preparing in advance can work in your favor.
Step 4- Select more than one lender.
Getting prequalified by one lender does not really serve the purpose. To find the best deal you should be able to compare personal loan offers from multiple lenders. So find at least two or more lenders. Most lenders today allow you to apply online, making it possible for you to get instantly prequalified.
Once you’re prequalified for personal loans from multiple lenders, you will receive multiple personal loan offers. This empowers you to compare the loan amounts and terms, interest rates, monthly payments, fees, and other charges. With a detailed comparison of these personal loan offers, you will be in a better position to decide which loan works best for your needs. Prequalifying for a personal loan is one of the primary steps involved in a loan approval. This process benefits lenders and borrowers alike. While it helps lenders determine your creditworthiness, it also gives you the opportunity to understand more about your personal loan options. However, remember that prequalification does not guarantee loan approval. Lenders will approve your loan only after proper verification.