One of the most common types of loans is the personal loan, which can offer you a way to get a significant amount of cash at a reasonable interest rate. Personal loan interest rates tend to be a lot lower than credit card rates, which makes personal loans a great choice for debt consolidation. This kind of loan offers the flexibility to use the money in whatever way you want, whether that's an elaborate vacation, repairs around the house, buying a car or making an investment.
A personal loan might not be the right solution for every situation, but it does offer a lot of flexibility for financial needs, and Chase is a reputable bank worth contacting when considering this type of loan. As a full-service bank, Chase can help address most financial needs an individual might have -- Chase car loans, mortgages, home equity loans, refinancing on existing home or auto loans, and small business loans are available -- as are personal loans. Because it's one of the biggest banks in the country, Chase bank locations are plentiful, and it's likely there's a branch location that is convenient to you. To get such a loan, you'll need to know all the details involved in the process, including information that will help determine if you're qualified.
Read: 9 Tricky Money Problems You Can Solve With a Personal Loan
Step-by-Step Guide: How to Get a Personal Loan From Chase
If you have an existing checking or savings account with Chase, your chances of getting Chase Bank personal loans might be improved. Chase follows a straightforward set of procedures for granting personal loans. To apply for a personal loan, you'll need to follow these steps:
Calculate the total loan amount you need.
Check your credit score and credit report to determine whether your credit is good enough for a loan at a sufficiently low rate.
Shop around for the best personal loan rates and requirements at banks near you and make an inquiry at the banks you're most interested in. For a Chase loan, contact a branch near you to see what it can offer.
Figure out your annual income: This is your annual salary plus any other income streams you might have, such as investments or freelance work. If you're paid on an hourly basis, get your annual salary by multiply the number of hours you work per week by your hourly wage. Then, multiply that number by 52 (the number of weeks in a year). For example, if you earn $25 per hour and work 40 hours per week, your annual salary is 25 x 40 x 52 = $52,000.
Figure out your debt-to-income (DTI) ratio: Add up all your recurring monthly debt payments and divide them by your gross monthly income. If you spend $1,300 per month on recurring payments -- such as car payments, rent, etc. -- and earn $4,000 per month before taxes, your DTI is 32.5 percent.
Fill out the loan application with information including your annual income and DTI.
Give Chase or your bank of choice a copy of required documents like bank statements, tax filings and recent pay stubs.
To qualify for good interest rates on Chase Bank personal loans, Chase Bank auto loans, or any other kind of loan, make sure you have an acceptable DTI ratio and a good credit score.
Chase Personal Loans: Credit Score and More Application Criteria
Once you've decided to get a personal loan, you might narrow down your options to banks that you already do business with. Oftentimes, banks prefer borrowers who have set up checking and savings accounts with them; that is, banks like to make loans to customers with whom they have an existing relationship. If you're already an Chase personal banking customer, you might have a better chance of scoring a personal loan from them.
Credit Score
To apply for personal loans, you need to lock in your interest rate and then fill out an application. The bank will then review your credit history and check out a critical factor in their decision-making process: your credit score. Your credit score is a key criterion to getting the best unsecured personal loan rate at Chase or any other bank. A higher credit score can lead to approval as it indicates your creditworthiness for a personal loan -- and the higher your credit score, the better your personal loan rate will be.
Read: 7 Ways to Raise Your Credit Score in 2016
Debt-to-Income Ratio
In addition to your credit score, banks will want to review your DTI ratio and annual income to determine the size and rate of loan for which you'll qualify. Banks typically want to see that your debt payments are below 43 percent of your annual income. That rule has become prevalent since the financial crisis in 2007-2008. If your DTI ratio is above that percentage level, expect to pay more for the loan.
How to Get a Personal Loan With Bad Credit
A low credit score can lead to being rejected for a personal loan. If you have a credit score below 630, you are unlikely to qualify for a personal loan without the help of a cosigner. Bad credit indicates to lenders that you're a risky borrower -- one who might not pay off what you owe in a timely fashion, if at all.
Though you might not find Chase Bank personal loans for bad credit, there are answers to the question of how to get a personal loan with bad credit. Bad-credit personal loan lenders are an option, and some regular personal loan companies do have the ability to offer you a bad-credit personal loan. You might consider a secured personal loan -- no credit check involved.
What Happens After You Apply for a Loan
Once you have applied for a personal loan, most major banks like Chase send your application onto their underwriting department where the loan application is reviewed and approved or denied. Processing times on loans vary, but a personal loan can be processed in as little as 24 hours. Your bank loan officer can work with you to address any issues that might come up, so as long as your DTI ratio is below 43 percent and your credit score is above 630, getting a loan is usually feasible.
Loan limits vary with each unique situation and borrower. Typical personal loan terms usually range anywhere from 12 months to 60 months, so you can calculate your estimated monthly payment based on your loan amount and interest rate.
Read: 9 Ways to Pay Off Student Loans Before Your 30s
This article originally appeared on GOBankingRates.com: How to Get a Personal Loan With Chase