When it comes to personal loan requirements, most lenders have similar criteria. However, there may be some slight differences in their credit score, monthly income, and fee requirements. For instance, some may require higher approval standards, such as an excellent credit score.
So what are the requirements for a personal loan? Continue reading to learn about the most common personal loan requirements and discover how to meet these requirements and get approved quickly.
What Are Some of the Personal Loan Requirements?
The most common personal loan requirements by credit unions, banks, and online lenders include:
1. Monthly Income
Your monthly income is one of the first things that the lender will inquire about when you apply for a loan. It shows whether you have the means to repay the loan. To ensure that, they have a minimum monthly income requirement.
The income requirements may vary for each lender. For instance, Cash in Minutes requires borrowers to have a minimum monthly income of $1,000.
However, many lenders don’t disclose the monthly income requirements on their websites. So you will have to mention your income in the loan application and check whether it meets their minimum income requirements.
2. Credit Score
Your credit score is yet another important factor that influences your lender’s decision. It ranges from 300 to 850 and is determined by things like your payment history, credit history, and any outstanding debts.
Nearly all lenders have a minimum credit score requirement for borrowers. Since personal loans are unsecured loans and hence risky, lenders usually require a higher credit score.
On average, lenders require a minimum credit score of 560. However, in order to get your desired loan terms, you will need a minimum credit score of 650.
3. Debt-to-Income (DTI) Ratio
Your debt-to-income (DTI) ratio represents how much of your monthly income you use to pay off your debts. It helps lenders determine your ability to afford a new loan.
Therefore, every lender has a minimum DTI requirement for borrowers. A DTI of 36% is usually considered ideal by most lenders. However, Some lenders may even accept a DTI of 50% if your monthly income and credit score are high.
4. Origination Fee
Some lenders also require an origination fee to cover the documentation costs. It ranges from 1% to 10% of the loan amount and is also influenced by the borrower’s credit score. It is usually deducted from the loan amount or collected as cash.
However, not all lenders require an origination fee. So make sure to check with the lenders whether they require any origination or documentation fees,
What Documents Are Required for a Personal Loan?
In order to apply for a personal loan, you will need to provide some documents to confirm your personal information. These include:
1. Application Form
One of the most important documents required for acquiring a personal loan is the loan application form. All borrowers are required to complete and submit the application form by filling out their personal information, mentioning the loan amount, and specifying the purpose of the loan.
2. Proof of Identification
To verify your personal information, age, and citizenship, you will also need to provide some proof of identity. This can either be your passport, driver’s license, birth certificate, or a government-issued ID. Lenders collect proof of identification for their records and also to reduce identity theft.
3. Proof of Residence
In addition to proving your identity, you will also need to provide proof of residence. This is to ensure that you have a permanent residence. You can either provide a recent utility bill, a rental agreement, or a copy of your lease to verify your address.
4. Proof of Income
Last but not least, you will also need to provide proof of income to ensure lenders that you have a stable and steady monthly income. Lenders require proof of income so they can determine whether you will be able to pay back any existing and new loans.
To prove your income, you can provide any recent paystubs, bank statements, your employer’s contact information, Form W-2, or Form 1099.
Apply for a Personal Loan Today with Minimal Requirements
If you want to apply for a personal loan online with minimal requirements, apply today at Cash in Minutes. Cash in Minutes has a very lenient criteria for approving personal loans and even accepts minimum monthly income and bad credit. What’s more, they offer same day funding! So head on over to their website and apply online.
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