Lenders will want to know why you are taking out a personal loan. Before you get ready to apply, make sure your reasoning for taking out a personal loan is crystal clear.
3. How much money do I need to borrow?
Get a rough idea of how much money you need to borrow before you start applying for personal loans. For example, a couple taking out a personal loan to pay for their wedding could get an idea of how much they’ll spend by asking vendors for quotes.
If you’re taking out a personal loan for debt consolidation, you’ll want to reference that credit report you requested. Your credit report will list all debts that are taken out in your name, so you can add them up and determine the amount you need to borrow. You could also refer to your credit card billing statement or call your creditors to learn the payoff amount.
Since you’ll be paying interest on the entire loan amount, it’s best to find a loan that’s just the right amount. If you take out much more than you need, then you’ll end up paying interest on money you didn’t need to borrow.
4. How much can I afford to pay each month?
When you’re borrowing money, be transparent with yourself about your finances. You don’t want to get in over your head with a personal loan that you can’t afford to pay back. If you default on your loan, then you risk lowering your credit score. Before you borrow, think about where you stand financially and where you expect to see yourself in the near future.
To estimate your monthly payment based on your credit score and the amount of money you need to borrow, check out LendingTree’s personal loan calculator.
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