How to Get a Personal Loan in Delaware Featured Image

By: Loanclose Staff

A personal loan can be a great way to get the cash you need to consolidate debt or finance a home improvement project in Delaware — as long as you have a reliable plan to pay it off.

The following are a few steps to take when getting a personal loan in Delaware:

Whether you’re interested in borrowing from a bank, credit union or online lender, the process is mostly the same. But getting a loan the smart way requires a little extra research and care to make sure you get the best offer available.

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Why get a personal loan?

A personal loan is a great option if you are looking to consolidate high-interest debt, have unforeseen expenses, or looking to fund a home improvement project. A personal loan is often an alternative to credit cards in Delaware. The average interest rate on a two-year personal loan in Delaware is 9%, according to an October 2020 study from S&P global, compared to the average credit card interest rate of about 16 percent.

With a personal loan, you could receive the funds within a few days depending on your credit score and the lender you are borrowing from, which is perfect for time-sensitive needs. They also can be unsecured, which simply means you don’t have to put up your home or property as collateral and won’t risk losing anything due to delinquency.

When borrowing, it’s important to remember that personal loans aren’t free. You should only consider getting one if you are sure you can afford to pay back both the principal and interest of the loan.

8 Simple steps to get a personal loan in Delaware

If a personal loan sounds like it’s the right type of financing for you, we have created an 8 step process to get a personal loan in Delaware.

1. Run the numbers

When getting a personal loan it is important to ensure you are able to afford to pay it off. While Delaware lenders 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.

To start, determine how much cash you’ll need to borrow, keep in mind that some lenders may charge an origination fee, which they deduct from the value of your loan. Ensure you borrow enough to get what you need after the origination and any other fees.

You will then want to use a personal loan calculator to find out what your monthly payment will be. With a Delaware loan calculator 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.

Recap: Before you apply for a personal loan, figure out how much cash you’ll need and what monthly payment you can afford.

Next Step: Use our Delaware personal loan calculator to estimate your monthly payments and see if you can afford it.

2. Check your credit score

Lenders will run a credit check to determine how likely you are to repay your loan. Lenders will typically always look at your credit even though some online lenders have started to look at alternative credit data.

Most of the top personal loans in Delaware require that you have at least fair credit. Having good or excellent credit will give you the best chance of getting approved with a good interest rate.

If find that your credit score is lower than you expected, get a copy of your credit report from AnnualCreditReport.com to see if there are any errors. If you find mistakes, contact the major credit reporting agencies (Equifax, TransUnion and Experian) to get them corrected.

If your credit score is low for other reasons, you may still have a chance to get a loan. But the interest rates and fees may be too high to make it worth it, so take steps to improve your credit before applying.

Recap: The higher your credit score, the more likely you are to get approved for a loan, and the lower your interest rate could be.

Next steps: Check your credit score and history. If your score is lower than the qualification requirements, take the necessary actions to improve your score.

3. Consider your options

Depending on your credit score, you might need a co-signer to get approved for a loan with a fair interest rate. If you can’t find a co-signer, you may have the option to get a secured personal loan instead of an unsecured one.

Secured loans require collateral like a home, vehicle, or cash in a savings account or certificate of deposit, in exchange for more favorable terms. If you fail to repay the loan, the lender can seize the collateral to satisfy the debt.

Now you’ll also need to think about where to get a loan. Using traditional banks you might find it hard getting approved if you have bad credit. Some online lenders, however, specialize in working with bad-credit borrowers in Delaware, and some credit unions have short-term loans that are cheaper and safer alternatives to payday loans.

Recap: If you’re having trouble meeting the qualification requirements, a co-signer, a bad-credit loan or a secured loan could improve your chances of approval.

Next steps: If you don’t think you’ll get approved, research your loan options or reach out to a family member or friend with good financial health about being your co-signer.

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4. Consider your options

After you understand your credit situation and you’ve considered your options it is now time to determine which type of loan is best for your situation. Some lenders offer flexible terms on how you use your funds while others might only approve your loan application if the money will be used for certain specific purposes.

For example, lender A might be okay with you taking out a personal loan to fund your small business. But lender B might not allow you to use borrowed funds for any type of business purposes. It’s generally smart to find a lender that is comfortable lending you money for the exact reason you need it.

You can search the DEloan Delaware Personal Loan Marketplace for different types of loans.

Some examples of the uses of personal loans in Delaware are:

  • Debt consolidation loans: Debt consolidation is one of the most popular uses for personal loans. Through taking out one loan to cover your existing debt, you are able to receive a lower interest rate and decrease the number of payments you have to worry about each month.
  • Credit card refinancing loans: Some lenders specialize in loans for people looking to pay off credit card debt. Because personal loan rates are often lower than credit card rates, a loan may be a good way to clear your credit card balances and pay them off over a longer period.
  • Home improvement loans: If you are looking to pay for a large renovation upfront without taking out a secured home equity loan, you can take out a home improvement loan.
  • Medical loans: Medical expenses are often unpredictable, so using a personal loan to pay for medical debt may be a good option to decrease the immediate financial burden and pay down that debt over a number of years.
  • Emergency loans: Emergency loans are useful for any unforeseen financial burden. Car issues, smaller medical expenses or a burst pipe are valid reasons to take out a personal loan.
  • Wedding/Event loans: Weddings and vacations can be expensive, which is why some people turn to personal loans to fund them. This spreads payments out over a number of years, so you don’t need to worry about paying for a special occasion all at once.

Recap: Find a lender that offers loans designed for your specific needs.

Next steps: Search the DEloan personal loan marketplace and find the loan that is ideal for you.

5. Shop around for the best personal loan rates

When getting a personal loan in Delaware it pays to shop around. Taking time to view your options helps you find the best possible interest rate. Compare several types of lenders and loan types to get an idea of what you qualify for.

You can generally find personal loan offers in Delaware from the following financing sources:

  • Online lenders
  • Credit unions
  • Banks

If you’ve been a longtime member with your bank or credit union, consider talking to it first. If you’ve shown that you’ve made positive financial choices for years, your bank or credit union may be willing to look past some recent credit missteps.

Online lenders also allow you to get prequalified with a soft credit check, this won’t impact your credit score and is a great way to view offers without any commitment.

If a lender doesn’t offer a prequalification option, they typically utilize hard credit inquiries as part of the loan application process. These hard credit score inquiries can affect your credit score so it’s best to do your rate shopping within a 45-day period to count them as a single inquiry for credit-scoring purposes.

Recap: Shop around to find your options. Compare several lenders and loan types and check for a prequalification option before applying to avoid an impact on your credit.

Next steps: Shop around and compare offers, rates and fees to find a loan with competitive rates.

6. Pick a lender and apply

After doing your due diligence, pick the lender with the best offer for your needs. Then start the application process.

With most online lenders, you will be able to do the entire application process online. If you are using a local bank or credit union you may need to do part of your application at your local bank or credit union branch.

The information you need when applying is different depending on the lender you are applying with. Typically you’ll need to provide your full name, address and contact information. You’ll also need to provide the reason for the loan as well as your income and employment information.

After providing all the required information and submitting your final application, you’ll have a chance to review the final terms and conditions for the loan. This will include all relevant fees along with your repayment period. Be sure to read through the fine print carefully in order to avoid hidden fees and other pitfalls.

Recap: The qualification and application process varies by lender. While lenders may ask for different information, most lenders ask for basic personal information along with income and employment information.

Next steps: Be prepared to apply with details about your financials along with the reason you need a personal loan.

7. Provide necessary documentation

With some lenders, you may need to provide some documentation after you submit your application. For example, you may have to upload or fax a copy of your latest pay stub, a copy of your driver’s license or proof of residence before receiving your loan.

The lender will let you know if it needs any documentation from you and how to get it to the right person. The faster you provide the information, the sooner you’ll get a decision.

Recap: Be prepared with all necessary documentation during the application process.

Next steps: Have ready your pay stubs, proof of residence, driver’s license information and W-2s in advance to speed up the application process.

8. Accept the loan and start making payments

When approved the lender will notify you of your approval, now you’ll need to finalize the loan documents and carefully read and accept the final terms. After doing this, you’ll typically get the loan funds within a week — but some online lenders will fund your loan within one or two business days.

After you receive the loan, keep in mind when your first payment is due. It might be wise to consider setting up automatic payments from your checking account. Some lenders even offer interest rate discounts if you set your account to make autopayments.

It is also important to consider adding extra money to your payments each month. While personal loans can be cheaper than credit cards, you’ll still save money on interest by paying off the loan early.

Takeaways: You could receive the funds as early as one to two business days after getting approved and accepting the loan terms. Once you’re approved, start considering how you’ll pay back the loan.

Next steps: Create a plan and budget to pay off your loan: Consider automatic payments and think about paying off your balance faster to save money on interest.

How to qualify for a personal loan in Delaware

Lenders will look at your income, credit score and debt-to-income ratio when applying for a personal loan. While the qualification requirements will vary based on the lender, there are a few good practices you can adopt to increase your chances.

  • Increase your credit score: Having good credit makes it easier to qualify for a personal loan with a lower interest rate.
  • Minimize your debt: Paying your bills on time and in full can have a positive impact on your credit score, this increases your chances of approval. Paying off debt will also minimize your debt-to-income ratio, which will help you qualify for more competitive loan offers.
  • Use a co-signer: If you’re having trouble qualifying, asking a family or friend in good financial health to be your co-signer can increase your chances of approval.

Tips for applying for a personal loan in Delaware

If you’re searching for a personal loan, finding the right loan and getting approved are a few of the factors you should consider. You will also want to protect yourself and avoid common mistakes borrowers make.

Make sure a you get the lowest rate possible

Before you consider using a personal loan, it may be worthwhile to take a break and make sure that a personal loan is the best option for your exact situation.

There may be other types of loans that could better serve your needs. Taking out a home equity loan or home equity line of credit may be cheaper and more effective.

Considering that home equity loans are secured by your home, whereas personal loans are generally not secured, your interest rate is likely to be more favorable when you tap into home equity. Keep in mind that by pledging your home to back the loan, you’re accepting considerably more risk in exchange for a potentially lower rate.

Be careful with credit card consolidation

Using a personal loan to pay off credit card debt on more than one account and consolidating the payments is one of the most popular uses of personal loans. If you can secure a lower interest rate on your personal loan than you were paying on your credit cards, this strategy has the potential to save you a lot of money in interest.

Use this Delaware debt consolidation calculator to calculate how much money credit card consolidation might save you.

However, if you’re taking out a personal loan to consolidate expensive credit card debt, you should be careful. You can sabotage your money-saving efforts and potentially hurt your credit scores if you rack up fresh credit card debt again once you pay off the old cards.

Read the fine print

Make sure you ask the lender for a full disclosure of all the loan terms and read the fine print. There are differences in the terms offered by different lenders.

You should look over the entire terms and conditions for any loan, take a look at the fees and repayment period as well. This can help you avoid hidden costs and avoid mistakes.

Something major to pay attention to is to make sure the monthly payment and repayment terms work for you. Thi is important because there could be fees for late payments, applications, returned checks, credit insurance and more.

The lender is looking to generate a steady stream of interest payments from you over the term of the loan, so also check for any prepayment penalties in the event that you want to pay off your loan early.

Be aware of origination fees

When applying or shopping for a new personal loan in Delaware, pay close attention to whether the lender charges origination fees. While some lenders might seeming offer lower interest rates, they may also tack on an origination fee that effectively hikes the overall cost of your loan.

In some cases, you may be better off with a lender that offers a higher rate than others but doesn’t add on any origination fees. Using a Delaware loan comparison calculator you compare can interest rates, origination fees, and other fees to find and the true cost of financing between different lenders.

Avoid predatory lenders

There are a few rules of thumb to avoid falling victim to a personal loan scam. If a lender guarantees approval or isn’t interested in your payment history, there’s a good chance it is not legitimate — sometimes lenders specializing in bad-credit loans need to assess your creditworthiness to determine if the risk of lending to you is worth it. Reputable lenders will also have a physical address in DE and will be registered in your Delaware.

It is best to also avoid payday lenders when searching for a personal loan. Payday lenders offer short-term loans that are due by the date of your next paycheck. They may be attractive if you need a loan quickly, but they are notorious for charging very high-interest rates, often upward of 400 percent of the loan amount.

Final thoughts

Now that you are a Delaware personal loan expert, it is time to ask yourself will a personal loan work for me? Personal loans can be an excellent way to consolidate and save money on higher-interest credit card debt. And if you’re borrowing to make some home improvements, you may be able to get some of the money back when you sell the home.

But it may not make sense to borrow money for something you don’t need. For instance, vacations can be fun, but you may end up regretting it if you’re still paying off your trip years later.

Take some time to determine whether getting a loan is right for your situation. Also consider some alternatives, such as 0 percent APR credit cards, that can help you save on balance transfers and new purchases alike.

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