How to apply for a personal loan

How to apply for a personal loan

Applying for a personal loan can be a daunting process. Your credit history is examined and this can be tricky for those who do not have a credit history or whose history is unfavourable. You will need to be absolutely sure that you can afford the repayments by using an instalment calculator online, so you are not out-of-pocket every month. If you are considering applying for a personal loan, below is some handy advice on what important steps to take before you do.

Check your credit history

This is an important first step to take when applying for any loan, as your credit history has a direct effect on whether or not the bank is willing to approve your application. If you have any problems on your credit record, you will need to address these with the credit bureaus to rectify them.

Online loan approval will only happen once a bank has looked at your credit history and has found it acceptable. It will show how much credit you have as well as if you have missed any repayments over the years. If any of these details are incorrect, you will need to explain this to both the bank and to the credit bureau in order to provide the most accurate account of your finances.

Decide on how much money you need

Once you have looked at your credit history, you will need to decide on how much money you need for your loan. The amount you borrow should be based on the expense you’re trying to cover and your income.

It is better to determine how much you are able to spend each month and borrow less than your maximum so you are not spread too thinly each month. Taking out a loan that is too small can leave you with extra expenses that the loan does not cover, but taking out a loan that is too large will see you paying a high interest for years to come. You will need to carefully calculate how much you can afford to pay per month before applying for a personal loan.

Organise your paperwork

Now that you have the amount in your mind that you need to apply for and you have checked your history, you will need to organise all documentation for the bank before sending in your forms.

This documentation will include a copy of your identification document, your proof of income, bank statements showing proof of savings, and bills addressed to your residence or rental agreements to show proof of residence at an address. Organising all of this documentation beforehand will ensure that you are prepared and it will show the bank that you are serious about the money that you need to borrow from them.

Look for the right loan

Your paperwork is in order and you have an appointment with a few banks to find out what they are offering, so it is important to be on the lookout for the right loan to suit your needs. Do not be afraid of shopping around for loans if your current bank does not offer you what you need.

You will need to check the interest rates, the fees, the loan terms, and the payment options to find one that fits your needs. Look online and visit banks in person to speak to someone about what they can offer you based on your information. The right loan should be affordable and you should be able to cover all of your expenses with the amount.

Have the right expectations

Applying for a personal loan when you are in a hurry is never a good idea. This is because loan officers have a certain protocol they need to follow when approving a loan and getting your money, so it is important to be patient and to allow the bank time to work through their process as efficiently as possible.

During the application process, be sure to ask your loan officer for a breakdown of the steps that will be taken, so you know what to expect and when to expect it. While some loans can be pre-approved upfront, the specifics may not be known until a few days or weeks have passed. Ask for advice on how and when to follow up and whether or not you need to provide reasoning for a personal loan, as some banks do ask for this upon receiving an application.


Applying for a personal loan is a big financial step to take, so it is important that you take all precautions and use an installment calculator to figure out your affordability before sending in the forms. Check your credit history and then decide on how much you need for your loan, as this will help you to create a monthly budget to stick to. Once your paperwork is organised, be sure to set the right expectations so that you are not disappointed if your loan application takes time to go through.

Authored by: mjones

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