With any personal loan application, a number of documents are requested to confirm your personal and financial position. Although some lenders may have their own application and eligibility criteria, most will ask for similar documentation.
Knowing what you need ahead of time and having those documents together may help you qualify sooner and, ultimately, get the money you need sooner.
What do I need to apply for a personal loan?
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After you make the initial application, lenders require documents to validate all information that you have submitted. This is a means of determining your repayment ability and personal loan rates.
Application form
Most lenders would have you fill out some sort of application to get approved for a loan. If you’re borrowing from an online lender, this is done completely online. If you apply for a personal loan through your local bank or credit union, you may have the option to fill out the application in person with a bank representative.
The application will slightly vary from one lender to another, but it typically asks for information such as the following:
- Your full name
- Contact information
- History of residence
- Date of birth
- Social Security number
You will want to choose an amount to borrow, answer some questions about what you intend to use the money for, and then supply financial information regarding your monthly income, bills, and debt obligations.
Proof of Identity
Lenders have to be able to identify you to give you your loan. Typically, two proofs of identification are required, and acceptable documents may include the following:
- Birth certificate.
- Certificate of citizenship.
- Driver’s license.
- Military ID.
- Social Security card.
- State-issued ID.
The lender has to be able to read your identification- no blurry photos from your smartphone or scanner, which could delay things.
Employer and income verification
Unsecured personal loans are based on your income when determining how much money you qualify for. Because you aren’t required to secure a loan with some type of collateral, you’ll need to show that your income is stable and verifiable to qualify.
If you have a traditional source of employment, you will have no trouble substantiating your income with the following types of documentation:
- Pay stubs.
- Tax returns.
- W-2s and 1099s.
- Bank statements.
- Contact information for the employer.
The following documents may be needed in case of your self-employed status:
- Bank statements
- 1099s from the previous two years
- Tax returns for the past two years
If a regular employer employs you, you will find your pay stubs and tax forms easily through the online database service utilized by your payroll provider. You can also contact your human resources or payroll department to obtain the information.
Proof of Address
You will also be required to show proof of address and how long you have lived at that address. Since you may have had numerous addresses or recently moved into a new location, you will not qualify for this.
While some lenders may insist on specific documents, the following will always do, by and large:
- Utility bill.
- Rental or lease agreement.
- Mortgage statement.
- Evidence of insurance cover for either house or automobile.
- Voter registration card.
- Receipt for payment of property taxes
- Bank or credit card statement.
If you need to confirm an address change, the U.S. Post Office has some helpful resources designed to help you do so. Of course, the quickest and most convenient way to do this is online, but you could also visit your post office in person to complete a form.
What if you aren’t approved for your loan?
There are a few things you can do to increase your chances of getting approved for your next application if your personal loan application is denied.
Obtain a co-signer
A co-signer- usually a family member or close friend- also takes legal responsibility for your loan by signing on when you apply. Adding a co-signer who meets the eligibility requirements can increase your odds of approval or help you qualify for a higher amount.
Take out a secured personal loan.
With this, you borrow money and back up the loan with something of value, like a boat, car, home, or RV. You would need to provide a paper document evidencing ownership, and a lender must determine how much the asset is worth before lending on it.
Credit score improvement
If you can’t qualify now for a personal loan and don’t need the funds urgently, consider working on your credit score. Among the best ways to boost your score in relatively short order is paying down your credit card balances.
Consider a credit card.
A credit card is designed to only cover small, day-to-day expenses, so it might not be the right choice if you need to cover a large expense. For those common projects under $1,000 that you can quickly pay off, a credit card might be a better deal. The applications will request similar documents and information, and finding a fitting credit card might be easier.
Conclusion
Preparing all your information and documents beforehand before applying for a personal loan is a good idea. This will save you precious time and potentially avoid funding delays. Ensure all your documents are legible and provide them as soon as possible for faster processing.
Not all lenders require the same, so before applying, you can find out what the general documentation criteria are. This way, you will be better prepared for the process and, hence, get approved faster and get the money sooner.