Getting a loan approved is easier said than done, considering the process included in it, as well as having solid proof that you’re capable of paying for it.
So, if you’re planning to get a personal loan from a lending company, make sure to follow these tips to ensure that you’ll have your personal loan approved.
1. Determine the Type of Personal Loan You're GettingWhile personal loans may be thought to refer to unsecured and closed-end installment loans, secured loans (such as credit cards, mortgages, auto loans, and payday loans - those requiring a collateral) are also considered personal loans.
Usually, secured loans use your collateral as the lender’s guarantee that you’ll be paying for the loan. On the other hand, unsecured loans don’t require collateral but has a higher interest rate.
Therefore, it’s important to know what type of personal loan you’re applying for, so you can find out if you’re qualified for the said loan.
2. Verify Your Credit HistoryYour credit history plays a huge role when applying for loans, as it determines your repayment conduct (e.g. if you’re paying on time), as well as shows the loans you have applied for.
If an application was rejected, your credit score takes a big hit, and this will not do well for you on your next loan application. This is why it’s important to avoid applying for loans you know you’re not qualified for.
Also, avoid things such as unpaid loans, bounced checks, dishonest loan purpose, and credit card delinquency, as these would hurt your loan application.
3. Find the Right Lending CompanyBefore applying for a loan, make sure to go through several potential lenders—the reputable ones. Usually, you would need to base this off of your credit score. So, find lenders you would qualify with depending on this.
However, even if this would narrow down the field, make sure to look into the lenders that you can apply for. It’s important to know all the details from the fine print to the interest rate, up until the terms of the loans you’re considering getting.
From there, you can proceed with discussing all relevant documents, as well as their suggested timeline for approving your loan.
4. Be Honest with Your Provided InformationDuring your application process, the lending company would verify all the information that you have given them and may call you to confirm some personal data.
Should they fail in reaching you, expect that your application would not push through.
Make sure to list down correct information regarding your finances, mortgages, and employment, among others, as discrepancies can delay your loan approval and may potentially lead to a rejection.
5. Know Your Limits and Aim for a Realistic Loan PrincipalBe sure to apply for an amount that is realistic according to your income, because after all, you’re the one that will be making the payments.
One possible scenario is that the lending company may grant you a lower loan than what you’ve applied for upon realizing that you may not be able to repay it. This can still be a good thing rather than being completely rejected.
6. Create a ChecklistOnce you’re done surveying the potential lenders, it would help to make a checklist of all the requirements for the loan application.
This may involve talking with your employer, creditors, and other financial resources to complete your application, as incomplete submissions may result in a quick denial.
7. Patience is KeyWaiting for your loan approval can be frustrating, such that you may consider applying for multiple loans simultaneously. However, never be tempted to apply for a number of loans at once.
If the lender finds out about this, they might think that you’re certainly in a financial pitfall. Remember, these would reflect on your credit history and may hurt your chances of getting approved for other loans down the line.
In a nutshell, all loan applications have its corresponding issues. But, if applying for one is the only option you have, and then do it accordingly to save yourself from all the troubles.