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Personal loans are popular for a variety of reasons. They’re useful for meeting unexpected financial needs, consolidating credit card debt, and many other situations. Though Union Bank is a large financial institution, it does not offer personal loans to its customers. It does, however, offer a variety of other types of loans.
This article will discuss the types of loans that Union Bank offers, as well as where you can look for a personal loan.
Loans Offered by Union Bank
Union Bank offers a few different lending services and loans. The loans that are available are:
Mortgages are a well-known type of loan that many Americans will have at one point in their life. Mortgages are large loans that used to finance the purchase of real estate.
Because of the cost of real estate, these loans tend to have long terms, often fifteen or thirty years. The fact that mortgages are backed by real estate allows them to charge low interest rates.
Home Equity Lines of Credit
Home equity lines of credit let homeowners turn some of the value of their home into cash. You can use a HELOC to withdraw cash, up to a limit of a percentage of the equity that you have in your home.
When you withdraw the money, you have to pay it back over time. These loans have low rates because they’re backed by your home’s value.
Personal lines of credit
Personal lines of credit are like personal loans, but allow you to draw cash on an as-needed basis, rather than in a single lump sum.
In a way, they’re like credit cards in that you can use it when you need to, and leave it alone when you don’t.
Credit cards let you buy something now and pay for it later. If you want to buy something expensive without carrying around the cash to cover the cost, a credit card makes it easy.
If you don’t for the purchase in full by the end of the statement period, you’ll have to pay a lot of interest.
Where to Look for Personal Loans
Though Union Bank doesn’t offer personal loans, there are many banks that do. In fact, there are so many banks that offer personal loans that it’s important for you to take the time to compare the options available to you.
The first thing to look at when applying for a personal loan is the criteria that the lender uses when deciding whether to approve the loan. Some lenders will only approve people with a great credit score. Others are more willing to offer loans to people with imperfect credit. You can’t get a loan without getting approved, so that’s the first thing to focus on.
Once you’re confident that you have a list of banks where have a good chance of getting approved for a loan, look at the interest rate. The loan’s interest rate can be thought of as the cost of the loan. The higher the interest rate, the more you’ll pay over the life of the loan. Look for the lowest rate available as it can save you a lot of money over time.
Related to the interest rate is the origination cost of the loan. Many lenders charge a fee when you open the loan. The fee can be a fixed amount or a percentage of the amount borrowed. So, if you borrow $ 10,000 and have to pay a 2% origination fee, your loan’s initial balance will actually be $ 10,200. Higher origination fees mean you’ll pay more for the loan, so try to keep them low.
Also look at the terms that are available, meaning how long you’ll have to pay the loan back. Personal loans commonly come in three- and five-year terms. Longer terms mean lower payments, but more interest charged over the life of the loan. Which you choose depends on your financial situation, but make sure the lender offers the loan term you’re looking for.
Finally, look at the fine print. Make sure there’s an easy way to contact customer service if you have any issues. See if the bank has strict terms regarding late or missed payments, or if they can be flexible. Double check if there’s a fee for paying the loan back early. Some lenders try to nickel and dime customers with lots of fees, so reading the fine print can help you avoid those issues.
How to Apply for Personal Loans
When you apply for a personal loan, you’ll probably do so in person or over the internet. The company offering the loan will ask for a variety of information from you, including:
- Date of birth
- Proof of identity, such as a driver’s license
- Social Security number
- Annual income
- Proof of income, such as bank statements or pay stubs
- Verification of employment
Using that information, the bank will decide whether to approve your application.
Though it may be difficult to get all the information and paperwork together, it is important to do so. Any missing information will reduce your odds of getting approved. In fact, if the bank asks for a lot of information it’s a good sign. The more the bank knows about its customers, the better it can determine their default risk.
By assessing risk accurately, the bank can determine interest rates more accurately, letting it charge lower rates than competitors with looser approval rules that charge higher rates to make up for defaults.
Improving Your Chances of Getting Approved for a Personal Loan
There are a few factors that impact your odds of getting approved for a personal loan, or loans in general.
The first thing that people think of when thinking about getting approved for a loan is their credit score.
Your credit score is a numerical representation of how likely you are to pay your loans on time. The higher your score, the more likely you are to pay your loans and the less risky it is for someone to lend to you. That means a good score will improve your odds of getting approved for a loan.
Your credit score is calculated from five factors:
How to Improve Your Credit Score
The biggest part of your credit score is your payment history. The only way to improve that aspect of your score is to make on-time payments over a long period of time.
If you need a personal loan in the short-term, there’s one factor that you can easily target: the amount you currently owe. For mortgages, car loans, and the like, this is simply the total balance of all your loans. For credit cards and revolving lines of credit, this is a ratio of the amount you’ve borrowed divided by the sum of your credit limits.
The less you owe, the better it is for your credit score. The best way to make a short-term improvement to your credit score is to pay down your loans as much as possible and to avoid using your credit cards. This will reduce the amount you owe, improving your score.
Your debt to income ratio is the amount of money you owe divided by your annual income. The lower this ratio the better it is.
It’s fairly obvious why this is an important metric in the loan approval process. If you want to borrow $ 500,000 but only make $ 25,000, it will be hard for you pay the loan off. However, if you wanted to borrow $ 500,000 but make $ 1 million a year, it would be comparatively easy to pay the loan off.
How to Improve Your Debt-to-Income Ratio
There are two ways to improve your debt-to-income ratio.
The first is paying down your existing loans. This has the benefit of improving your credit score as well, further improving your chances of qualifying for the loan. If possible, you should pursue this path.
The other option is to increase your income. Whether you do this by working towards a promotion at work or picking up a side job, it can help improve your chances. Just be sure that you can show proof of your extra income since the lender will want to make sure you actually make the amount that you claim to.
Reason for the Loan
Many banks also factor the reason you’re applying for the loan into the approval process. A lender will be more likely to approve loans that will be put to good use rather than for a frivolous reason.
What’s a Good Reason to Apply for a Loan?
Banks are more likely to approve loans for projects like home improvement or consolidating expensive credit card debt into one, cheaper loan. By contrast, if you are already in debt and are looking for another loan to go on vacation, lenders are less likely to approve that loan.
When applying make sure you can give a clear reason that you’re applying for the loan. If it’s for something like debt consolidation, it can also help to show the loan officer your payment plan for if you get approved.
Though Union Bank does not offer personal loans, there are many banks that do. Follow these tips and you’ll have a good chance of getting approved for a loan that meets your needs.