To apply for a personal loan you will need to meet several requirements defined by your lender, and you’ll want to have specific documents on hand.
We’ve laid out five steps to help you prepare to apply for a personal loan, including how to understand your eligibility and prepare your documents.
1. Consider why you need a loan
Knowing what you’ll use the loan for may help you decide how much you need, the length of time you’d like to pay it back, and the type of loan to choose. Are you using your loan to consolidate and pay down higher-interest debt? Are you looking to pay for home improvements, get help with unexpected expenses, or finance a dream vacation? How you plan to use your loan should help determine how much you need to borrow and whether the flexibility of a personal loan might help.
2. Do the math
Whatever the reason for the loan, you can start by estimating the total amount that you will need. For example, if you want to consolidate your debt, start by listing all the debts you want to combine. Decide how much you can comfortably afford to pay each month. Also, think about how long you want or need to pay off the loan. Discover® Personal Loans provides a simple tool to calculate your potential savings when consolidating debt.
3. Assess your eligibility
Eligibility rules may vary among lenders, so be sure to review what each lender requires. For a Discover personal loan, for example, you must have a minimum individual or household annual income of $25,000 to be considered.
In addition, there are two factors in your financial profile to consider as you think about your chances of getting a loan:
Check your credit score
Your credit score is important. It impacts how much you may be able to borrow and the rates you might receive. You can find your credit score in a number of ways. For example, you may be able to find it on your credit card statement, credit counselors, credit score services, or through credit reporting companies. Some Some Discover customers can check their credit score online or through our app.
Understand your debt-to-income ratio
Your debt-to-income (DTI) ratio may also impact your eligibility. This number compares how much you earn to how much you spend on rent, mortgage, credit cards, or other debt each month. Lenders may use your DTI to determine their risk in lending to you. In other words, your debt-to-income ratio is a measure of your creditworthiness.
4. Gather all necessary documents
During your application process, the lender will ask you to share information. If you know ahead of time what documents might be needed for your personal loan application, it may help keep you organized and make the process easier.
You can refer to this checklist to help you prepare for your application:
Proof of identity
- Social Security card
- Birth certificate
- State-issued driver’s license or ID
Proof of employment and income
- Paycheck stubs
- Bank statements
- IRS 1040 form submitted for your previous year’s tax returns
- Employer’s contact information
- Employment history from the past five years
Proof of address
- Utility bill
- Rental agreement or mortgage statement
- Bank or credit card statement
- Voter registration card
Personal financial information
- Bank account number and routing number for direct deposit into your checking or savings account
- Balances and creditors’ account numbers if you are interested in debt consolidation and want the lender to make direct payments
5. Compare lenders
It is important to trust the people and companies that lend you money. Check to see if the lenders you are considering publish their reviews online, for example. And read reviews published by sites that compare lenders. The more assurances you can get, the better.
No matter which lender you choose, be sure you understand the application process and the repayment terms. Then, once you have the documents you need, the online loan application process can be fast. If you have questions, your lender should be able to help you complete your application.
Finally, if you are approved, read the loan agreement carefully before saying “yes.”
That’s it! Discover Personal Loans is here to help make your application process as easy as possible. Our 100% U.S.-based loan specialists can walk you through our available repayment terms, so you can select the one that meets your financial goals.
Now that you know what you need, see the steps involved in applying for a Discover personal loan.How to Get a Personal Loan