Applying for a personal loan online is convenient. It is often faster than applying for a loan in person. It allows you to compare rates and research options, when you do it right. Here are a few tips on how to avoid mistakes when getting a personal loan online.
Do Your Homework
The best online loans will give you a reasonable interest rate without hidden fees, and they’ll do so without making you wait weeks for the money. Do your homework and research every potential online lender. Don’t make the mistake of submitting your personal information to a would-be identity thief. Use portal sites and aggregators that vet online lenders for you, so that you aren’t ripped off. You want to find the best personal loans online. Now you only have to compare loan terms from the interest rate to the associated fees to the monthly payment you’d pay. They even let you filter out lenders that won’t work with you because of your current credit score. Or you could skip the lenders that charge a penalty if you prepay the loan. We’d recommend running your credit before you apply for an online loan, so that you don’t submit applications assuming you have good credit when an error is giving you a bad credit score. While it can take time to clear errors on your credit report like duplicate entries, this will bring down your debt to income ratio and result in a better interest rate when you do apply for a new loan.
Review the Legal Requirements
Verify that the lender is located in your state or licensed to do business in your state. If they aren’t, they’ll probably reject the application for that reason. If the lender doesn’t list what state they’re located in or doesn’t say what states they do business in, don’t enter your information because it is probably a scam. Lenders are legally required to be registered with the states in which they do business and list that information on their website.
Double check the terms and conditions. What information does the lender want as part of the application process? Can you provide it? What are you agreeing to? Don’t take out a loan that requires repayment before you’ll have the money. What is the interest rate? What fees will you be assessed if you’re late or have to roll over the loan? If the lender doesn’t provide this information up front, don’t do business with them.
Fill in Every Relevant Field
A surprising number of online applications of all kinds are rejected because someone left out a mandatory field. Perhaps they didn’t fill in their maiden name, something that allows them to verify your identity. Not entering a phone number for fear of being solicited or simply hit with collection calls can result in a rejection, too. Missing information in the application may prevent it from even reaching a human loan processor, preventing your request from even being considered.
Double Check Your Work
Typographical errors can be embarrassing. They can lead to an online application being rejected, too. If your typed name or address doesn’t match the one on your ID, they may reject it out of fear that you’re trying to get a loan in someone else’s name. Transposing digits in a Social Security Number will get you rejected, too.
Letting your browser automatically fill in fields for you can cause problems, as well. If it enters an old phone number or junk email, you may not get the confirmation message necessary to prove that you’re you. Now the loan is rejected, and you never get the money. Compounding the problem is the fact that you don’t get their notification saying why the money wasn’t sent.
Review the drop-down menu options they have. You may not run into problems if you don’t select Mister or Misses. You could be rejected if you don’t select the box saying you’re over 18 or select your birth year from a drop-down menu. Failing to check the check boxes that you agree to abide by their terms and conditions could lead to rejection, as well.
Double check the loan terms, too. Asking for 500 dollars when you need 5000 dollars can cause all kinds of problems. For example, you may be prohibited from asking for the additional 4500 dollars you need from that lender, and you’ll run into problems if you apply for a different 4500 loan elsewhere. Selecting a 10-month loan term instead of a 30 month loan will result in higher payments than you can afford.
Provide the Necessary Documentation
If you were applying for a home loan or a car loan, you’d be asked to provide photo ID to prove that you’re you, copies of your pay stub or other income verification, and other records. An online loan comes with similar requirements. Expect to have to provide a copy of your personal identification. You may have to pass a liveness test to prove that you’re the person in the photo on the ID. Income verification may be necessary, as well, whether it is a pay stub or a copy of your tax return. Fortunately, you won’t have to run your credit report. The lender should do this themselves using your Social Security Number.
This may seem counter-intuitive, but not being patient can cause all kinds of problems with your loan application. Trying to resubmit the application while it is still loading could trigger anti-fraud measures. Or they may send you twice as much money as you requested, increasing your debt payments and impacting your credit.
Do not try to take advantage of other lines of credit while the application is processing. For example, you shouldn’t apply for new credit cards and a new car loan while your online loan is processing. Multiple hits to your credit for new lines of credit will hurt your credit score, and it will make the subsequent lenders concerned about the increasing debt load. However, refinancing current debt will not cause a problem.