You can always secure a loan to fund for a much-needed home renovation, or for a quick getaway with your family. In some instances, you might need to apply for a loan to settle medical emergencies, school fees, or simply to consolidate your debt. Regardless of the reason for your loan, there are already various financial institutions that can get you the funds you need. Nowadays, banks are no longer the only organizations where you can get the funds you need.

The financial sector leveraged on the advancements in modern technology. Several banks and other financial institutions already have an online presence, offering consumers with seamless transactions, particularly in terms of loan applications. With application processes being managed online, the tedious need for you to manually accomplish application forms are eliminated.

1. Know About Personal Loans

If you are a first-time borrower, it is important to do your research and know all about personal loans. By definition, a personal loan is a monetary amount borrowed from a lender to finance the personal needs of the borrower. Depending on the amount borrowed, lenders generally do not require a collateral with personal loans.

Loan Process

Securing a loan is a straightforward process that starts from the application of the loan until full payment. Before applying for a loan, however, it is important to compare different offers from various lending institutions. This will allow you to get the best deal in terms of processing fees, interest rate and payment options. Upon choosing the perfect provider, the next step is the application proper. It is necessary to accomplish all the required forms and submit all the required documents for your loan application to be processed. Once the lender approves your application, your loan proceeds will be released. What follows suit is the repayment of your loan, until it is closed.

Loan Interests

Personal loans employ both an effective rate and an add-on rate. The effective annual interest rate is translated as the total cost of borrowing the principal amount. It encompasses the administrative fees and charges for your application. On the other hand, monthly add-on rate is the charge collected by the lender on a monthly basis. Upon comparing between the two types of interest rates, the effective annual interest rate is higher.

Loan Fees

There are certain loan fees that you need to settle in the event that you have an approved loan application. You will be asked to pay for a certain processing fee. This is usually a one-time fee, which covers the cost of your entire loan application which may include credit investigations. However, this doesn’t cover other fees such as a documentary stamp fee or a returned check fee in case of checking accounts with insufficient funds. In the event that you wish to settle your loan earlier than the payment term you applied for, you will be charged a pre-termination fee. In the same manner, if your payments are delayed, you will be charged a late payment penalty. These fees vary depending on the lender.

Benefits of a Personal Loan

• Lower interest rates. Personal loans have a comparatively lower interest rate compared to cash advances through credit cards.
• Flexible payment terms. With a personal loan, you have the option to choose a suitable payment term. Technically, a longer payment duration will yield lower monthly installments, but a higher effective interest rate. Conversely, a shorter payment duration will yield higher monthly installments, but a lower effective interest rate.

Drawbacks of a Personal Loan

• Pre-termination Fee. In the event that you are able to pay off your loan sooner, lenders usually charge a pre-termination fee to cover a portion of the agreed effective interest.
• Penalty Fees. If the loan is left unmanaged with several late payments, the penalty can eventually end up larger than the sum of the principal amount borrowed.

2. Prepare the Requirements

Before proceeding with a loan application, verify your eligibility. Banks and other lending institutions typically require a proof of income. This becomes their basis in granting the loan amount, and at the same time, a guarantee that you have the means to pay back the money you borrowed within a specific time frame. Your proof of income can be your tax return form or your pay slip if you are employed, or your audited financial statements if you are self-employed or running your own business.

3. Process the Online Application

An online application process is a convenient means to secure a loan. You can finish the entire process in a matter or minutes. Get personal loan online by first going to the website of the financial institution where you are planning to borrow. Navigate to the tab or panel dedicated to loan applications. There should be a button that will lead you to open an online application form. Fill out the form by keying in the necessary information about you such as your name, your income, and the loan purpose among others. Keep in mind to provide accurate details. In this way, the processing of your application will not be impeded.

Prepare the supporting documents needed in your application. It is better to scan your documents, rather than merely taking a photo, to generate a clearer image. Depending on the protocol of the certain institution where you will borrow, you will be asked to email the images, or upload these on their web site. You will also be asked to confirm to their terms and conditions. After which, all that is left to do is to wait for confirmation from the bank or the lending institution. This confirmation may be in the form of a phone call, SMS, or email. There are instances wherein you will be asked to send through further documents.

With today’s modern technology, there are already various means to secure the funds that you need. The process of applying for a loan is already made seamless and more convenient for consumers. However, it is still necessary to ensure the safety and security of your online transactions.