 TITLE: What Is a Personal Loan? CONTENT: How to Compare Personal Loans\n-----------------------------\nJust as with any other financial product, it's important to shop around and compare several personal loan options before applying for one. Even if you get an offer from your primary bank or credit union, it's possible you could find a better deal elsewhere.\nHere are the different features to consider while you're comparing personal loans:\n*   **Interest rate**: A loan's interest rate represents the cost of borrowing money. The average personal loan interest rate is 9.41%, according to Experian data. However, your rate offers may be higher or lower based on your credit and financial situation.\n*   **Loan term**: Different lenders offer varying repayment terms, and how long you have to repay a debt impacts your monthly payment. If one offers you three years to repay a debt and another offers only two years, your monthly payment could be significantly higher with the second option—but you might also save on interest with the shorter-term loan.\n*   **Fees**: In addition to interest, some lenders charge fees that could increase your annual percentage rate (APR). Origination fees, for instance, are deducted from your loan funds before you receive them, and some lenders also charge late fees and prepayment fees if you pay off your loan early.\n*   **Funding time**: Some lenders offer next-day or even same-day funding, while others can take several days to deposit the funds into your checking account. Depending on how soon you need the money, consider these timelines.\n*   **Other features**: Not all lenders provide added features, but some may allow you to get a lower interest rate if you set up automatic payments or have an existing relationship with the bank. Others may offer forbearance options if you lose your job.\nMany personal lenders allow you to get prequalified with a rate offer before you officially apply. This process typically requires a soft credit check, which won't impact your credit score. This process can allow you to compare loan options side by side and pick the best fit for you.  \nHow to Qualify for a Personal Loan\n----------------------------------\nPersonal loans are available for most consumers across the credit spectrum, but there are some things you can do to improve your chances of getting approved at a favorable rate. Here are some factors lenders consider when you apply:\n*   **Credit score**: Your credit score is a snapshot of your overall credit history, and the higher it is, the better your chances of getting approved with a low interest rate. That said, there are personal loans for bad credit, so you're not completely out of luck if you don't have time to improve your credit before you apply.\n*   **Income**: Your ability to repay the debt is another major factor, and lenders will specifically consider your debt-to-income ratio—that's how much of your gross monthly income goes toward debt payments. A low ratio means you're more likely to be able to afford your loan payments because there aren't too many competing debts.\n*   **Credit report**: While your credit score is important, lenders will also check your credit report to make sure there aren't any negative items from the past that could affect their decision. Specifically, things like delinquent payments, collection accounts, bankruptcy and foreclosure could act as a red flag and make it difficult to get approved.\nIf your credit and income situation isn't where you want it to be for a personal loan, work to improve it before you apply.\nStart by checking your credit report to pinpoint areas you need to address, and also work on paying down debt to reduce your debt-to-income ratio. This process can take time, but it can save you a significant amount of money if it can help you qualify for a lower interest rate.  \nDo Your Homework\n----------------\nA personal loan can help you cover necessary expenses and improve your debt situation. But it's important to consider both the benefits and drawbacks before you apply. It's also essential that you take the time to shop around and compare different options before applying for one.\nAs you research lenders, check out Experian CreditMatch™, which can provide loan offers from multiple lenders in one place with just a few details from you. This can help you save time as you research and narrow down your list of potential lenders. END