What to Expect When Applying for a Personal Loan

A personal loan can be a great tool to use when you are looking at purchases you are looking to make. Depending on the purchase, you might require a larger sized loan. This means that a personal loan might be a perfect solution for you to look into.

There are a number of reasons to choose a personal loan, but it is a good option to have. Learning more about the process of applying for a personal loan, but also what to expect with the loan itself is a good thing when you want the most from a loan that is able to meet all of the needs you have.

Enjoy the many perks of applying for a personal loan when you read ahead and get prepared for all that is happening. We can help you make the most informed decision on whether a personal loan is the best loan for you and your needs.

Reasons to Borrow a Personal Loan

There are a number of reasons to borrow a personal loan. Depending on your needs, you might find that this type of loan is the perfect addition to your financial needs and background. Here are some of the more common reasons and uses of a personal loan.

  • Medical and dental bills 
  • Emergency situations 
  • School costs 
  • Debt consolidation 
  • Want to make a huge purchase
  • Use for a down payment on a larger purchase 
  • Moving costs
  • You need to cover bills 
  • Business costs

Personal loans are the most flexible types of loans you are able to obtain to help you pay for a number of things. Depending on your needs, you might find that this is the ideal loan for you to apply for.

Get a recap of the best places to get a personal loan. Compare best personal loan rates, find trusted lenders and choose the optimal personal loan for your individual needs.

The Personal Loan Application Process

The application process is a simple one. You just need to choose the financial institution or bank that you want to borrow from. You might already have a bank that you work with or are looking into the available options.

Once you open the application, you fill in the spaces with the information they are asking of you. They may not request proof of the answers you give right away, but they will be asking for proof of these things later on This is something that you should keep in mind, so y9u can keep this information and proof handy for when they do ask for it.

Some of the information that they ask during the application process includes:

  • Income 
  • Residence 
  • Personal information such as name, phone number, birth date
  • Debt that you have
  • Credit score and history check 
  • Mortgage, rent or vehicle payments you currently have

There might be more or less questions depending on the bank that you are applying with. Be prepared with your financial and personal information, as they are all going to ask for this when applying for a personal loan.

Getting Approved for the Loan

Every lender has their own requirements for borrowing. This is important to look into when you are looking at borrowing from someone. However, there are some things to keep in mind when you are applying and want to be approved for the loan itself.

You might get disqualified if you have a poor credit score, or if you requested to borrow too much. Additionally, having a high debt-to-income ratio is going to cause you to be denied for the personal loan that you are applying for.

The minimum score for these personal loans in Canada is 650 usually. Some lenders might require you to have a higher or lower credit score based on their own lending requirements, as well as how much you want to borrow from the institution.

Additionally, it is important to keep in mind that you might be capped at how much you are able to borrow. You want to make sure you also make enough money to cover this amount comfortably, especially given the debt that you have to pay every month, as well.

Approval should not be hard to do, especially if you do your research ahead of time. This way, you can see if you might be approved before you actually go to apply for the loan.

Interest and Fees on the Personal Loan

There are a number of different personal loans in Canada that you can choose from. You can find that the interest payments range from 3% to 47% depending on the lender that you choose to work with. It also goes off of your income, how much you borrow, and your credit score and history. This is all going to make a difference when you are applying for a loan and keeping up with the payments because you are able to afford them.

You will end up paying back the interest, as well as the principle, or the original amount you borrowed in the personal loan.

Every once in a while everyone needs a little bit of help. Whether it is to catch up on overdue bills or cover an emergency expense, a fast personal loan can be a great solution to get you over the hump. Get a Personal Loan Now!

Frequently Asked Questions About What to Expect When Applying for a Personal Loan

Do I have to use the same bank that I bank with?

You can use any financial institution to borrow this money from, so keep this in mind when you are choosing the right bank to work with. You want to work with someone you feel comfortable with, even if they are new. If they specialize in these personal loans, you might want to work with them anyway.

Are there extra fees that come with the personal loan?

This depends on the lender, but sometimes there are additional fees that you have to pay when you are taking out a personal loan. These can be the application fee, origination fee, prepayment penalties, late payment fees, and other fees.

Reading the paperwork when applying for the personal loan can give you a better idea of what your specific lender might charge in fees on top of the interest rate and principle.

The application fee ranges from $25 to $50, while the origination fee is between 1 and 6% of the loan amount that you borrow. Prepayment fees might not be a thing with the loan you’re choosing to borrow but this is something to ask the lender, as each one is different.

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Amanda Leach

Fifteen years can be a long time to work in one industry, but not when you are doing something that you love. Amanda has enjoyed the freedom of working as a freelance writer for the majority of her career. She has successfully combined her passion and skill for writing while still enjoying a life filled with travel, learning and exciting new experiences. While she loves exploring all different types of writing, her PhD in Consumer Psychology has made her a sought after writer for marketing, business and technology fields. Amanda is a regular contributor to Smarter Loans.