GREAT EASTERN INSTITUTE

5 J Catalan St., San Isidro, La Paz, Tarlac

Building bridges to the future…
Senior High School Department

“Personal Loan Requirements”

Submitted by:
Bautista, Via Bianca Louise
Castro, Lexie Anne
Gabriel, Harvey Ceasar
Lagason, Jeanette
Oguan, Andrea
Silvestre, Jamelle

12- ABM

Submitted to:
Charyl Navarro
 GREAT EASTERN INSTITUTE
5 J Catalan St., San Isidro, La Paz, Tarlac
Building bridges to the future…
Senior High School Department

PERSONAL LOAN

 Personal loan is an amount of money you can borrow to use for a variety of purposes. For
instance, you may use a personal loan to consolidate debt, pay for home renovations, or plan a
dream wedding. Personal loans can be offered by banks, credit unions, or online lenders. The
money you borrow must be repaid over time, typically with interest. Some lenders may also
charge fees for personal loans. 
 Personal loan requirements vary by lender, but there are a few considerations, like credit score
and income, that financial institutions always look at when reviewing applicants. Before you
start shopping for a loan, familiarize yourself with the common qualifications you’ll need to
meet and the documentation you’ll need to provide. This knowledge can help streamline the
application process and may improve your chances of qualifying.

Five Common Requirements to Evaluate in Loan Application

1. Credit Score and History
- An applicant’s credit score is one of the most important factors a lender considers when
evaluating a loan application. Credit scores range from 300 to 850 and are based on factors
like payment history, amount of outstanding debt and length of credit history. Many lenders
require applicants to have a minimum score of around 600 to qualify, but some lenders will
lend to applicants without any credit history at all.
2. Income
- Lenders impose income requirements on borrowers to ensure they have the means to repay a
new loan. Minimum income requirements vary by lender.
3. Debt-to-income Ratio
- Debt-to-income ratio (DTI) is expressed as a percentage and represents the portion of a
borrower’s gross monthly income that goes toward her monthly debt service. Lenders use
DTI to predict a prospective borrower’s ability to make payments on new and current debt.
For that reason, a DTI less than 36% is ideal, though some lenders will approve a highly
qualified applicant with a ratio up to 50%.
4. Collateral
- If you’re applying for a secured personal loan, your lender will require you to pledge
valuable assets or collateral. In the case of loans for homes or vehicles, the collateral is
typically related to the underlying purpose of the loan. However, secured personal loans can
also be collateralized by other valuable assets, including cash accounts, investment accounts,
real estate and collectibles like coins or precious metals.
5. Origination Fee
- Though not part of the qualification process, many lenders require borrowers to pay personal
loan origination fees to cover the costs of processing applications, running credit checks and
closing. These fees usually range between 1% and 8% of the total loan amount, depending on
factors like the applicant’s credit score and loan amount.
 GREAT EASTERN INSTITUTE
5 J Catalan St., San Isidro, La Paz, Tarlac
Building bridges to the future…
Senior High School Department

Typical Personal Loan Documents

 Loan Application
- loan application is a formal document that lenders require prospective borrowers to complete
and submit to begin the lending process. Each lender has its own application, so the specific
requirements may vary. In general, though, you’ll need to provide basic personal
information, how much you want to borrow and the purpose of the loan.
- The format of a loan application may also vary by lender. While there are numerous online
lenders that offer a completely online application experience, others may need to discuss
your application over the phone before providing a decision. There are also a number of brick
and mortar banks and financial institutions that require applicants to submit a paper
application in-person.
 Proof of Identity
- Most lenders require applicants to provide at least two forms of government-issued
identification to prove they are at least 18 years old and a United States citizen. This
precaution also reduces the threat of identity theft. Acceptable forms of government-issued
identification often include:
- Driver’s license
- Other state-issued ID
- Passport
- Certificate of citizenship
- Birth certificate
- Military ID
 Employer and Income Verification
- A lender wants to see that you have the ability to pay back your current debts as well as the
new loan. To do this, lenders typically require prospective borrowers to demonstrate their
employment history and current earnings as part of the application process. Common forms
of income verification for traditional employment include:
- Paystubs
- returns
- W-2s and 1099s
- Bank statements
- Employer contact information
 Proof of Address
- most lenders want to know that you have a stable living situation. This may involve
providing proof of your address, including a recent utility bill, a copy of your lease or other
rental agreement, voter registration card or proof of home, rental or auto insurance that lists
your address.
How to Get a Personal Loan?
 You can often complete personal loan applications online, and a decision may be available as
soon as the same day. However, there are a few things you should do before you even fill out the
 GREAT EASTERN INSTITUTE
5 J Catalan St., San Isidro, La Paz, Tarlac
Building bridges to the future…
Senior High School Department

application. If you’re ready to apply for a personal loan, consider these steps before beginning
the process:
1. Check your credit score
2. Take steps to improve your score by checking for inaccuracies and paying down debt
3. Decide how much you want to borrow
4. Use lender prequalification to shop around for competitive rates
5. Submit a formal loan application
Steps in Applying for a Personal Loan
1. Check Your Credit Score
- Check your credit score before applying to ensure you'll meet the minimal credit score criteria.
While some lenders make this information available to the public, not all do. As a general rule, having
high credit—a score of at least 670—is a safe bet; but, certain lenders may consider applicants with fair
or poor credit (below 670). - Your credit score plays a role in determining your annual percentage rate
(APR) and the amount you may borrow. Borrowers with great credit are often offered the best prices and
conditions.
2. Prequalify for Loans Through Multiple Lenders
- Many lenders will let you check your rate and terms without putting a hard query on your credit
record, which will lower your credit score for a year. - You may compare offers and determine how
likely you are to be accepted for a personal loan at a competitive rate by using a lender's prequalification
tool. Prequalification can also assist you avoid getting hit with aggressive enquiries for loans you won't
be approved for. - Look for an offer to enter your information on a lender's website, such as a button that
reads "Check Your Rate." You may be asked about your income and housing payments, as well as how
much you want to borrow, when you fill out a prequalification form online.
3. Compare Your Offers
- Once you've finished the prequalification procedure, you'll most likely get the loan terms you
qualify for. If you've been prequalified for many loans, it's critical to analyze each offer to determine
which is the best fit for you.
4. Complete a Full Application
- Once you have pre-qualified for a loan, a lender will give you a period of time, possibly several
weeks, to submit a formal application. The information you will need to complete your application will
vary by lender. However, you can expect to enter basic contact information and details that will help
confirm your identity, such as: B. Your social security number (SSN) and driver's license numbers.
5. Close, Manage & Repay Your Loan
- After your application is reviewed and approved by a lender, final loan documents will be sent
to you detailing your loan details, including interest rate, loan term, loan amount, and monthly
payments. - Once you have signed your loan documents, your lender will generally deposit the money
directly into your bank account. This can take anywhere from 24 hours to a week, depending on the
lender; Online lenders generally pay off funds faster. - This marks the beginning of your repayment
terms. To make sure you don't miss any payments, sign up for automatic payment or set reminders on
your calendar. Some lenders offer discounts of up to 0.25% to borrowers who sign up for automatic
payment.
 GREAT EASTERN INSTITUTE
5 J Catalan St., San Isidro, La Paz, Tarlac
Building bridges to the future…
Senior High School Department

What Should You Do If You’re Denied?

- A lender can deny your personal loan application for a number of reasons. Your credit score
may be too low or your DTI could be too high. It’s also possible that you asked to borrow
more money than the bank thinks you can repay based on factors like income, employment
stability and other outstanding debts.
- If a lender denies your personal loan application, there are a few steps you can take to
improve your chances of getting a loan in the future:
1. Ask for the specific reason your application was rejected
2. Review your loan application for mistakes or inaccuracies
3. Improve your credit score by paying down your current outstanding debts
4. Check for mistakes on your credit report
5. Increase your income
6. Compare lender requirements
7. Apply for a smaller loan amount
8. Consider using a co-signer

References;

Treece, K. (2021, February 22). 5 Personal Loan Requirements to Know Before Applying. Forbes Advisor.
https://www.forbes.com/advisor/personal-loans/personal-loan-requirements/?
fbclid=IwAR33FYiojy2EBFSeTXd7QTmkWdzqWHPup0Zdan-bf1OWoJdcqRTHqrUP1zw

Talty, A. (2021, July 27). How Do Personal Loans Work? Forbes Advisor.
https://www.forbes.com/advisor/personal-loans/how-do-personal-loans-work/?
fbclid=IwAR3kjDkgWVZU7nQHEVcbyowCccgfgK-8oAM5-2akzT2adsXHCcCy47LIkz4