Are you looking to apply for a personal loan in the United States of America and need clarification on the process, documentation, and eligibility? Well, we will answer all your questions and help you out!
To begin, allow us to guide you through the various personal loan options offered by banks that you can explore.
These options encompass a range of possibilities, including debt consolidation loans, credit card repayment plans, emergency funding, home improvement financing, medical expense loans, and wedding-related financial assistance. Most banks have similar processes to avail of these loans. Once you have made up your mind that a personal loan is the right choice for your financial needs at the moment, you need to ensure a few things at your end to increase your chances of securing a loan, such as:
1. Establish the precise loan amount that you are seeking. Excess borrowing might look tempting initially, but the repayment burden is eventually on you, and this is a fact that needs to be considered before arriving at the actual requirement.
2. Along with this, one needs to have a fair idea of what a comfortable monthly repayment figure would be.
3. Some banks charge an origination fee or upfront costs that need to be borne by individuals seeking the loan. This fee, if any, should also be factored in while arriving at the loan requirement.
4. Check your credit report. Most banks give out loans based on creditworthiness, and you are expected to have at least a FAIR credit rating. (Usually between 580 and 669 points). A credit rating that is good or excellent, which is above 670, ensures you have access to the best loans and competitive interest rates to choose from. Upon reviewing your credit report, be sure to identify any discrepancies and address them promptly if corrections are needed.
5. Most importantly, decide on the amount you require as a loan and the type of personal loan needed based on your requirements.
6. Explore the market to find the most favorable rates for personal loans..
Okay, now that you’re part of the market research is completed, the next step is applying for the loan. But wait, did you know that when you apply for a loan and do not meet the lender’s requirements, your credit score can be knocked off by a few points?? Always remember to prequalify with a few banks before formally applying for the loan.
What is Prequalifying??
Prequalifying is a tool offered by lenders where your credit score is not impacted. Before officially applying for the loan, your predicted interest rates and the chances of your loan being approved based on your eligibility are known so that you can make an informed choice. Not all banks offer prequalification, but it is a must for them to list the minimum eligibility requirements.
Once you have confirmed your eligibility and know your credit score as well, let’s get to the actual process of applying for the personal loan:
How to apply for the personal loan and what documents may be required:
Different lenders have different procedures.
While some may allow you to apply online, some banks may require you to meet them in person. The application usually includes basic personal information, income, employment information, and the intended purpose of the loan.
In addition to your application, it’s advisable to have your pay stubs, proof of residence, details from your Driver’s License, and W-2s on hand.
While applying for the loan, you will be informed about the complete terms and conditions of the personal loan, including the fees to be levied by the bank along with the repayment period. Also, watch out for the lender’s APR(Annual Percentage Rate). This percent includes ancillary costs like as origination, application, or administrative fees. Typically, the APR surpasses the actual interest rate provided by the bank.
After accepting the loan agreement, you will get this amount between 24 hours and within a week, based on the bank.
Which are the Best Banks in the USA, and what interest rates do they offer?
Name of the Bank Starting APR Interest Rate Credit Score requirement Maximum Loan Amount
Discover 6.99% Between 7.99% to 24.99% per annum 660 $40000
Citizens Bank 6.79% Between 6.79% to 20.88% per annum 680 $15000
Citi Bank 11% Between 9.99% to 16.49% per annum 680 $30000
Barclays Bank 4.99% Between 4.99 % to 20.99% per annum 700 $35000
Wells Fargo 7.49% Between 8.49% to 24.49% per annum 660 $100000
American Express 6.98% Between 5.91% to 17.97% per annum 660 $40000
*Please note that the interest rate offered is a combination of your credit score, your creditworthiness, the ability to repay the loan, and the type of loan itself- if it requires a co-signer or collateral, whether it is a secured or an unsecured loan, etc.
Can international students also apply for personal loans?
But there is a catch. International students who are F1 Visa holders can borrow from private lenders. Such loans are mostly disbursed directly to the institution where you are studying, as loans are mostly availed to cover the costs of education.Most lenders will also require a co-signer to sign the application with you.
Types of loans available to students:
Short-Term loans: Needed for short durations and in smaller amounts. The loan must usually be paid back in a few weeks, mostly in one go.
Installment loans: Repayment of the loan amount occurs through installments over a designated timeframe. Such loans help in building a good credit score. (Example: Up-to $5000)
Unsecured Loans: Loans that are not secured with an asset or collateral and have a fixed rate of interest and tenure. (The amount can extend to $100,000 or even higher.)
Some of the best lenders to approach for personal loans based on your credit rating for F1 Visa holders are:
1. Am One (If you have Okay or Good Credit)
2. Spring Loans (Bad or No Credit)
3. First Premier Lending (Bad Credit)
4. Upgrade (Good Credit)
5. Avant (Okay Credit)
Since students usually have a relatively unknown credit history as they have come from a different country, they fall mostly under the category of NO CREDIT.
Well, now that we have a fair idea of the available options to reach out to when one is looking for a personal loan, make sure you apply for one only when:
1. You truly need it!
2. Have done a thorough research by exploring all the choices made available to you
3. Have a repayment plan figured out!
Availing a loan is quite simple, but if you still need a repayment plan, things could go haywire and put you in a financial mess that could get bigger than what you were prepared for! When you repay your loans promptly, you build your credit history and score, brightening your chances of getting financial assistance if you ever need it again!
Personal loans can be very effective in solving your financial problems. Personal loans are available to all, including international students and citizens living in the USA. Various personal loan options have been previously discussed with you. You can also get interest rates on personal loans ranging from 6% to 8% and 11%. However, it depends from bank to bank on its interest rate. Many banks can also offer you a nominal interest rate of ₹24%; hence, if you are applying for a personal loan, then apply only after knowing the interest rates of all the banks.
1 Documentation required for a student applying for a personal loan:
The documentation needed is usually proof of enrollment, an active visa, and a high school, undergraduate, or degree transcript.
2 What are the usual criteria that lenders take into account when assessing eligibility for a personal loan in this scenario?
Although there is no specific eligibility criteria for a personal loan, if your credit score is good and you have any old debt and have paid it on time, then you will be offered the loan easily and at a low interest rate.
3 Is collateral a requirement for obtaining a personal loan in this situation?
No, In most cases, personal loans do not necessitate collateral, as they are typically unsecured.