Applying for a loan is easier than you think; follow these tips to ensure loan approval.
Loan approval is something you can plan for. If you know what lenders require of you, you can easily prepare and ensure that your loan is approved for even the most pricey and elusive items.
When seeking to find a loan, there are certain procedures that need to be followed. Often, loan applications are rejected for very preventable reasons. Here are some tips to ensure loan approval.
Type of loans
Knowing the type of loan you need to apply for is the most important first step. With various types of loans available such as personal loans, business loans, mortgages, and car loans to name a few, the requirements vary for each.
Here is a quick guide to the different types of loans available to you:
Apply for a business loan if you need money to finance your business or if you want to finance a new business venture.
Apply for a personal loan if you want to spend money on something that is personal such as buying a new phone, car or house.
Bad Credit Loan
A loan for people with bad credit is if you want to do one of the above but do not have a high enough credit score to meet the credit requirements of the loan.
Debt Consolidation Loan
Debt Consolidation loans are there to help you manage your debt. This loan is different than other types of loans as its purpose is settling all your outstanding debt. It is possible to save on interest as you will only have one, single repayment per both as oppose to several high-interest bearing accounts.
Applying for a loan requires you to submit therewith a number of basic documentation and information. These are requirements you will find at any reputable lender. These requirements usually pertain to the following:
- 18 yrs or older
- South African citizen
- Identification document
- 3 months bank statements
- Three latest payslips
- Proof of residence
It is not uncommon to see loans rejected because basic documentation was not submitted accordingly. This is a very preventable mistake. When applying for a loan, ensure that you know what documentation you need to submit. Having a checklist comes in handy.
Loan type requirements
As mentioned before each loan type carries with it, a set of lender requirements. In order for you to prepare accordingly, you would need to know exactly what the requirements are for the loan type you wish to apply for. It also gives you an overview of whether you would qualify for your chosen loan type.
This is particularly important when considering secured loan types. These loans require you to pay forward an agreed asset should you default on your repayment.
Another preventable reason why loan applications are often rejected is if you apply for a loan amount above what you need or can afford.
Stick to a loan amount that you need to take care of your financial needs and is well within your budget. Lenders want to see that you are financially able to repay the loan so should you apply for an amount that is not within your repayment ability, your application might be rejected. However, had you requested a reasonable loan amount, you might have enjoyed instant loan approval.
Loan application with bad credit
If you have a bad credit score or history, you will be relieved to know that there are lenders that cater for your specific loan requirements. Often the interest rate associated with bad credit loan is higher than other standard loan types. To qualify for such a loan, you would need to apply specifically for a bad credit loan.
Research loan and lender options
We have covered the importance of knowing the different loan types available to you. Researching the types of loans you might be interested in can help you better prepare for your loan application.
Lastly, another tip to securing loan approval is to research the different lenders available to you. Today, more than ever, there is a wider variety of lenders willing to offer you a loan. There is a financial solution to your current needs.
So, next time you are in need of a loan, keep these tips in mind to ensure approval, first time!