Advancements in technology continue to dictate the direction the finance industry is going thereby ensuring that getting a loan in Nigeria can happen within minutes.
A personal loan can help you get over a financial hump, cover an unexpected expense, pay down debt faster or make a big-ticket purchase. Most personal loans are unsecured and readily available through banks, credit unions, and online lenders.
There are several types of personal loans to choose from, including debt consolidation loans, home improvement loans, medical loans, and wedding loans.
But before applying, you should know that there are multiple steps involved in the application process. It’s beneficial to familiarize yourself with those steps so you’ll know what to expect and avoid any surprises.
As you set out to take a loan, be sure to come prepared. It is always important to have an idea of the requirements before launching into a loan search. Loan seekers are always advised to gather all the relevant documents and information.
Doing so will allow you to move through each step of the process efficiently and get your funds as quickly and seamlessly as possible.
The items you include, but are not limited to the following:
- Personal identification
- This could either be your driver’s license, National Identity Number (NIN), or an international passport.
- Proof of income
- This is mostly obtained via a bank statement. In other cases, a scanned payslip might suffice.
- Employer’s information
- Requirements are company name, manager’s name, address, and possible phone number.
- Proof of residence
- This is usually a utility bill with your name and address or a lease agreement.
Five Steps to Comparing and Getting A Loan In Minutes
Whether you are seeking a personal or a business loan, it is always important to pay attention to the following steps to make the process easier.
1. Run the numbers
More important than taking a loan to meet that urgent need, is your ability to repay it. While lenders typically do their due diligence to make sure you have the ability to repay the debt, it’s smart to run your own numbers to make sure it’ll work out.
Start by determining how much cash you’ll need, keeping in mind that some lenders charge an origination fee, which they deduct from your loan proceeds. Make sure you borrow enough to get what you need after the fee.
You could use a personal loan calculator to find out what your monthly payment will be. This can be difficult if you don’t know what kinds of rates and repayment terms lenders will offer, but you can play around with the numbers to get an idea of what the loan will cost you and decide if your budget can handle it.
2. Check your credit score
Lenders are known to play big on ensuring that borrowers are creditworthy. One way they do this is by running a credit check to determine how you as a loan seeker are likely to repay your loan.
While some online lenders have started to look at alternative credit data, they will still typically look at your credit score.
nairaCompare can help you run a credit check to know if you are loan worthy. You can get a copy of your free credit score report here.
If for some reason your credit score is low, you may still stand a chance to get a loan. But the interest rates and fees may be too high to make it worth it.
3. Choose your loan type
Once you know where your credit stands, the next step would be to determine which type of loan is best for your situation. While some lenders are flexible in terms of how you use the funds, others may only approve loan applications if the money will be used for specific purposes.
You may decide to take out a personal loan to either meet an urgent need or fund your small business. While some lenders might not allow you to use borrowed funds for business purposes at all, it’s smart to find a lender that is comfortable loaning you money for the exact reason you need it.
4. Consider your options
Depending on your creditworthiness, you may need a co-signer to get approved for a personal loan with a decent interest rate. If you can’t find a co-signer, or the lenders you’re considering don’t allow co-signers, you may have the option to get a secured personal loan instead of an unsecured one.
Secured loans require collateral, such as a vehicle, a house, or cash in a savings account or certificate of deposit, in exchange for more favourable terms. If you fail to repay the loan, the lender can seize the collateral to satisfy the debt.
You’ll also need to think about where to get a personal loan. With traditional banks, for instance, you may have a hard time getting approved if you have bad credit. Some online lenders, however, specialize in working with bad-credit borrowers, and some credit unions have short-term loans that serve as cheap alternatives to payday loans.
If you don’t meet the typical qualifications and your purchase can wait, take some time to build up your credit score so you can qualify.
5. Shop around for the best personal loan rates
One mistake borrowers make is settling for the first offer they receive. Avoid toeing this line. Make sure to take some time and shop around for the best possible interest rate.
nairaCompare has collated a couple of lenders and loan types that will give you an idea of what you qualify for.
As a borrower, you can generally find personal loan offers from banks, credit unions, and online lenders. If you’ve been a longtime account holder with your bank or credit union, consider checking there first.
Often, showing that you’ve made positive financial choices for years means your bank or credit union may be willing to look past recent credit missteps or give you a better rate.
If you opt for an online lender, be sure to see if they offer a prequalification process. Utilising this option will give you a full understanding of the rates available.
After you’ve done your research, the next step would be to pick the lender with the best offer for your needs. At this point, you can start the application process.
Depending on the type of lender, you may be able to do the entire application process online. Alternatively, some lenders may require you to apply in person at your local bank or credit union branch.
Either way, these days, securing a loan of that nature can be easy and simple. In most cases, the loan company makes the funds available within minutes.
Every lender is different regarding what information it’ll need on the application, but you’ll typically need to provide your name, address, contact information, your income, employment information, and the reason for the loan.
Worthy of note is the fact that all lenders have different qualification requirements and may ask for different information. Lenders may also require you to apply in person, while others let you complete the entire application online.
Accept the loan and start making payments
After the lender notifies you that you’ve been approved, you’ll need to finalize the loan documents and accept the terms. If you are taking the loan via an app, you will typically get credited within a few minutes. Traditional banks and other credit unions may credit you within 48 hours.
At this point, you need to start keeping track of when your payments are due and consider setting up automatic payments from your bank account.
Some lenders are known to offer interest rate discounts if you set up your account to make autopayments.