Tuesday 2nd of May 2017
Applying for a loan and getting it accepted can be a complicated business, influenced by several different factors. Whatever your current financial situation, there are ways to improve your chances of getting approved. Whether you need a small interim loan to boost your business or seed money for a new commercial venture, here’s a quick rundown of 15 handy tips to help you sign on the dotted line.
It’s important to make sure you choose the right kind of loan for your situation, i.e. what you are looking to borrow money for. You should also have a good reason for requesting the loan, as lenders will ask you why you need the money. If you’re after a loan so you can splurge on a holiday or an extravagant night out, then you’re highly unlikely to get accepted – unless your credit is absolutely excellent.
Did you know that every time you apply for credit, it has a knock-on effect on your credit score? Even more so if your application is rejected, as future lenders will wonder why. Don’t waste time applying for loans that you know you don’t really qualify for, just in case you get lucky. It’s more damaging than your realise.
Found a loan package you’re interested in already? Now is a good time to get in touch with the bank or lender and get all the details you need regarding eligibility. Do this before you start your loan application.
If necessary, book an appointment to go in and discuss the loan in person to find out what you need to do to get approved, including what documents they will expect to see. Every bank has a different way of doing things, so it pays to do your research beforehand.
All loans are different, but there is often a baseline criteria that must be met, regardless of who you’re looking to borrow from. Without meeting this criteria, it is unlikely you will be accepted for a loan, so be sure to check beforehand. To apply for a loan you must:
Ask yourself honestly: what can you afford? Look at the different types of loans available, their duration and their repayment rates. What can you reasonably manage in your current financial situation? Overestimating your requirements is never a good idea, and could leave you burdened with payments that are too steep for you to repay.
Spend a good amount of time looking over the numbers (or find someone qualified to do it) and decide how much you really need. This may also help you to decide which lender is the best option for you.
Once you’ve got all the information you need from the bank or lender of your choosing, start making a list of all the documentation that you will need to present for the loan to be approved.
Getting hold of all the necessary documents can sometimes take a while (as you’re relying on employers and other creditors) so it’s a good idea to start gathering everything together as soon as you can. Without the necessary documents, your loan could be denied simply for being incomplete.
If you already have a bank account, it makes sense to start there when applying for your loan. Since you’ve already been a customer for some time, they will know your financial situation well and be able to advise you on how much to borrow. With records of regular wages and direct debits, etc. going in and out of your account, you are more likely to have your loan approved.
At the end of the day, getting a loan accepted is all about showing that you’re fiscally responsible. A good way to build this impression is to make sure that you’re contributing regularly to your savings account. If you can show that you regularly commit to putting money aside, then it suggests that you will be able to do the same for your loan repayments.
It’s common for lenders to want to know your employment details, as after all, this is how you’re going to make your repayments. Your employer will likely need to provide a Verification of Employment (VOE) as proof – or you can provide your payslips.
Sensible loan applicants do their research. And then they do some more. It’s important to find the right lender who is most appropriate for your borrowing needs. Make sure you spend a good amount of time looking into the different possibilities – and don’t necessarily go with the first lender who approves your application. As with relationships, it’s worth waiting for the right one.
During a loan application is the worst possible time to start splurging cash on luxury non-essential purchases. If you really need a loan, then the yacht can wait. It’s not worth adding to your existing debt – it could impact your credit and reflect badly on you in your application.
Consult your loan officer for an idea of what’s acceptable and what’s not. And use your common sense – too much debt can be crippling.
Peer-to-peer lending has been around for more than 10 years now, allowing people to borrow money online from individuals rather than institutions. Needless to say, it’s become very popular among both investors and borrowers. Borrowers are able to get low-interest loans, while investors do very well on their returns.
To obtain a peer-to-peer loan you will still be subject to screening and credit checks – there’s no way to evade this. This then becomes part of your loan listing. However, some find that individual investors can be more forgiving than a bank or corporation. Popular peer-to-peer lending sites include Peerform and Prosper.
If you’re heading into a loan application meeting dressed like a hapless drifter, chances are they won’t jump at the chance to cut you a cheque. Especially if you’re after a large sum of money, you’ve got to look the part. Show them that you’re serious by dressing like a professional. You don’t need to go overboard, but you do need to look smart. Here’s some advice on dressing for success.
Whatever you discover the state of your credit score to be, there are always ways to improve it. But it can take time. Here are some rough credit brackets:
If you’re applying for a loan, you should start making arrangements to improve your credit score right away, especially if you are close to reaching a higher bracket. This could potentially save you a lot of money on interest.
Start improving your credit score by paying your bills on time, reducing as much of your existing debt as possible and avoiding late payment charges. And if you see something dodgy on your existing credit score, check it out and see if it can be wiped or resolved.
When you’re looking for a loan, it’s sensible to shop around. Not only can you find useful price comparisons, it also saves you traipsing from bank to building society. It is often possible to get a good introductory deal online.
But beware of scammers. There are plenty of shady online lenders out there who will ask for fees to approve your loan before vanishing into thin air. Look for licensed lenders and check out their customer ratings to make sure there are not in the midst of any lawsuits or dodgy dealings. This is where Oink Money comes in.
Are you looking for a personal or short-term loan? Then Oink Money can help. We provide a free credit broker service that will give you an instant online decision. Apply for a loan with Oink Monday today.