To be approved for a loan, you must first meet the eligibility requirements that have been set by the lending company or individual. These requirements may vary from one institution to another, and each requirement may not hold the same value as others in different companies.
If you are wondering what requirements you will need to apply for a personal loan, you are in luck because you’ve come to the right place. Just read on to learn more.
Requirements for a Personal Loan
A personal loan is a type of loan meant for personal spendings. The amount given can vary, depending on specific requirements and the lender. All lenders have their own set of requirements, but some common ones are as follows:
1. A Good Credit Score
Most lenders will require a good credit score for you to be eligible for a loan. This means that you have a good reputation when it comes to finances, such as paying your dues and bills on time. There are many ways to build this, but as long as you make regular purchases and pay before your due date for your bills, then you should be fine.
In case you may not have a good credit score, you do not have to worry. There are many lenders that would still offer you a loan despite a lower credit score.
2. Proof of Stable Income
This proof of income is a requirement because they would want to know whether you can actually make your payments on time. Some lenders may be worried that you are unable to pay off your debts because you may not have income by the due date.
Just as long as you have a job or any stream of income that has been stable for a while, then it should be fine. Ideally, this stable income should be for at least 6 months or more.
3. Debt-to-Income Ratio
If you have other debt, such as mortgages or car loans, then these will also be taken into consideration. This is also another way for lenders to tell you that you have room in your budget to pay for your loan.
For example, even if you make, say $6,000 a month, but your debt amounts to around $4,500, you may not be approved because that takes away about 75% of your income. However, if you were making only $3,000 a month, but your debt is only at $500, there’s a higher chance that you will be approved.
4. Collateral of Value
While there are some lenders who do not require collaterals, they are rare in number. Most, if not all, lenders will require valuable collateral to ensure you pay off your loan. Depending on the lender, they may accept cars, house deeds, jewelry, and more.
As long as the item is of high value with documents, then they will most likely accept it as collateral. In case you are unable to pay your loan, then they would not have been at total losses due to the collateral.
Applying for a personal loan would have different requirements per lender, but those mentioned above are the common requirements you should prepare yourself for. As long as you get to meet these requirements, then you should not worry too much about not being approved.
If you are looking for personal loans in Atlanta, GA, then Central Loan & Finance Atlanta would be glad to help you! We offer personal loans, tailored to your needs and ability to pay. Get in touch with us today for more information.