A personal loan is one of the most common types of loans. Usually, people apply for this loan to finance a home, consolidate their debt or start a new business. The best thing about a personal loan for your business is its low-interest rate, which will help you pay off your loan easily. Personal loan interest is usually around 10% to 15%, while your credit card loan is 17% to 20%, depending on your bank.
No matter whether you are borrowing this personal loan from a bank. With a private lender or from an online loaning site, you will have to go through the same procedure to get a personal loan. Not everyone gets their application approval for a personal loan. So you guys must be smarter than others so your loan application gets approved in the first go.
Reasons behind getting a personal loan
Many events come to life that we don’t have in our plans, like financing a home, a medical emergency, child marriage, or starting a new business. These are some of those things which can happen at any time, and you will need lots of money for them. Even if you must pay for a vacation, you will need a personal loan. These temporary shortfalls can be easily overcome with the help of personal loans. Always remember that getting a personal loan is not like buying vegetables in the market. You must follow some easy steps, and you will get the personal loan application approved in the first go.
Different types of Personal loans
Before we apply for a loan, we need to know what options we have to apply for. There are two main categories of Personal loans that we must look upon:
- Secured Personal loan
- Unsecured Personal loan
A secured loan is a kind of Personal loan that usually has a very low-interest rate but has a catch. You must put something as collateral to get this loan, and if you aren’t able to pay back the amount of the loan, the company will be the rightful owner of that collateral.
On the other hand, an Unsecured Personal loan has a higher interest rate, but you don’t have to put any valuable thing as collateral. This is a riskier chance to take at the lender’s end hence the higher interest rate.
Know how much money you need before you apply
This should be the first step to take when applying for a loan. So, before applying for the loan, calculate the total amount and then apply for the amount a little more than that. For example, if you need a loan of $50,000, then apply for $60,000. It will cover all the extra expenses, and you won’t have to apply for another loan to cover up small expenses.
Don’t apply for multiple loans
If you think that sending out an application to every bank will maximize your chances of approving a loan, then you are wrong. Always find a willing lender candidate and then put your application forward. The rejection of too many loan applications will negatively impact your credit score (inquiries). So, instead of sending multiple applications, choose the lender with whom you think you have the maximum chance of getting a loan.
Be Honest with a lender
Always put the right information in your application. If you try to trick banks or online lenders, it can bite you back. These companies have many ways to reach out to the truth about their customer, and if they find any misleading information in your application, they will reject it.
Don’t apply for a fresh loan without paying off the previous one
Finally, always try to apply for a fresh loan, and if you have a previous loan, never apply for a new loan over it. This will put a negative image of you in the head of the lender. If your credit history is clear, the lender will also have surety that you will pay off your loan.
If you are a startup or existing business that would like to refinance debt with a personal loan BitX Funding is there for you!
BitX Funding is an online marketplace for small business owners looking to fund a project. They specialize in connecting small business owners with lenders who will compete for your business. They believe small business owners drive the economy and are passionate about helping your company reach its full potential.