20 Feb Top Tips for a Successful Personal Loan Application
You know it’s true. Personal loan applications can be a stressful undertaking. But what if we told you it didn’t have to be so intimidating?
People pursue personal loans for a variety of reasons: debt consolidation, home improvement plans, business investments, weddings (and honeymoons, of course), vacations, cars, medical emergencies, and the occasional shopping spree. Whether you’re seeking a personal loan for that perfect wedding ring or an unsecured personal loan to cover some unforeseen medical expenses, the steps to ensure a successful application are often the same.
Fortunately, some preparation and responsible financial planning are all it takes to set yourself up for loan approval. Follow these top tips to give yourself the best shot at a successful personal loan application.
1. Verify That You Meet the Criteria
Round up the simple stuff first. Your essential documents will likely include your ID, proof of income, proof of address, banking history, and statements from any other outstanding loans you may have. Obtaining settlement figures or statements for other outstanding loans you may also have is a great idea. Often, our customers are unaware of how much they have already borrowed.
Meeting the criteria for your personal loan will mean proving you have the financial stability to pay off your debt. Your credit provider may also have age requirements regarding their loans, often between the ages 21 and 60.
Avoid applying for loans you know you’ll never be approved for, as this can harm your standing for future loan applications. It’s important to be realistic, not ambitious, in these early stages of your personal loan application to avoid biting off more than you can chew.
Also note that over estimating or under estimating your settlement amounts can either lead to delays in drawdown or issues with approval – it pays to be exact in your calculations.
2. Check Your Credit Report
Your credit score will be one of the most important determining factors in your loan application. You should always have an eye on your credit score but submitting for a formal credit report will be vital in proving in that can repay your loan. If your credit score isn’t quite as high as you might need it to be, then start taking the steps necessary to improve it. If you’ve defaulted on credit payments in the past and need help boosting your credit score, a bad credit loan can help accelerate the process.
3. Make Sure All Your Accounts are Current
This is similar to maintaining your credit score, but it’s important to make sure all of your existing lines of credit are kept current. That means making sure you’ve been paying your utilities, your mortgage, your car payments, and any other outstanding bills that may take priority over your loan payments. Your credit lender will want to know that no other obligations will get in the way of making your payments on time.
4. Demonstrate Good Saving Habits
Obviously, you won’t need to prove that you already have enough money to pay off your personal loan. If you had enough money in your savings, you wouldn’t need to take out a loan in the first place, but credit lenders like to see that you have good savings habits. That means maintaining a savings account and making regular (even if small) contributions to it. Proving that you don’t live outside your means, that your income outpaces your expenses, will send a strong message that you’re responsible enough to manage your personal loan.
5. Apply for the Right Amount and Have a Payment Plan
When applying for a personal loan, you need to have a detailed plan for the money you wish to borrow. Borrowing more than you need means paying unnecessary interest but borrowing too little could make a mess of your budget. Develop a plan for what you need and itemise exactly how it will be spent. Then, develop a budget plan to pay off your loan. Your credit lender will appreciate that you’ve done your homework and can account for where your payments will come from. An ethical credit lender will encourage you not to borrow more than you can handle.
Applying for a Personal Loan? Ask Questions and Stay Informed
Finally, ask questions. Ask many, many questions. You need to ask them now, not after you’ve signed on the dotted line.
Is there anything in the fine print you don’t understand? Are there any extra charges such as administration costs, origination costs, or pre-payment penalties? Does your credit lender have a good reputation and satisfied local customers (check their website for testimonials or ask your friends and neighbours)? Is the APR consistent with the total amount repayable and the monthly payment?
A personal loan is an important investment and making informed decisions is critical. A broker is very useful in assessing your lending options and providing advice on ensuring the obtain the best approval for you. Brokers know what lenders like and dislike, and which lender is most likely to say yes to your unique profile. Contact a broker at Max Loans today to help you get your personal loan approved.
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