How To Create The Process Of Getting Approved For A Loan Goals
Whether it’s to fund a life event or pay for an unplanned expense, it has never been easier to obtain a personal loan.
It can be a speedy and painless process that sees money go into your bank account within one business day. First, there are a few procedures to follow.
A personal loan approval process is made up of three parts. It starts with pre-qualification and hopefully ends with a green light to move forward with a loan. Let’s study them in detail.
Stage 1: Pre-Approval
You’ve identified the kind of loan you want and the amount you wish to borrow. You’ve shopped around the online marketplace and found a loan you believe is right for you. Now, it’s time to see if you’re eligible.
Pre-approval can be done on your mobile phone or computer. It typically takes around five minutes. It involves a soft credit check that doesn’t impact your credit score. Once you’ve created a username and password for the lender’s website, it’ll require you to submit the following information:
- Desired loan amount. This can vary from $1,000 to $50,000
- Your preferred monthly settlement and repayment term for the loan
- Your intended purpose for the sum
- Basic personal data including your date of birth and address along with the rudiments of your income and outgoings
Finally, you’ll need to give permission for a soft credit check to be performed.
Stage 2: Application
Within moments of completing stage one, you’ll be informed as to whether you’ve been pre-approved or denied. If it’s the former then most sites will allow you several days or weeks to pause the process. This will give you sufficient time to compile all of the relevant figures and information needed to submit your application.
If you want to secure your loan quickly then it’s advisable to have all documentation on hand. If properly prepared, it can usually be done within thirty minutes.
The information you’ll need includes:
- Your Social Security number
- Employment status and details regarding your employer
- Bank details and all pertinent financial information such as savings, listed assets, and any equity in your home
For paperless loan approval, it’ll be necessary to e-sign your agreement to the terms and conditions and certify that you’ve been truthful.
Stage 3: Approval
A hard credit check is triggered once the application has been submitted. This will have a detrimental effect on your FICO score. Moreover, it remains on your credit report for up to two years.
It’s common that documentation will be requested in order to verify some of your information. The lender will contact your employer and other individuals named on your application.
If approved, you can expect the funds to be made available within 24 hours. Your first repayment will typically be due within a month of funding.
Let’s briefly back up, though, because not everybody is approved. Here are a couple of tips that can increase your chances:
- Request a copy of your credit history prior to application and correct any discrepancies. Mistakes aren’t uncommon and such mistakes can falsely reduce your score
- Acknowledge your loaning range. You know your financial health better than anyone, so be aware of what type of loan is plausible
What To Consider When Applying For A Personal Loan
Personal loans are unsecured which means that no assets, such as cars or property, are at risk as collateral should you defer. Usually, these loans are fixed-rate and set for a fixed term.
As well as being fixed-rate, personal loans commonly have interest rates that are considerably lower than credit cards. Moreover, there are many loan options out there. Shop around and find the best deal.
Some other pros and cons of personal loans that should be considered in your decision making are:
- Your credit score suffers. As previously discussed, the application process has an adverse impact on your credit score. Should you get rejected, this effects it even more
- This is only temporary. By successfully obtaining a personal loan, you’re improving your credit mix. This is viewed favorably by future lenders. You could bring your credit score to good standing by paying off the loan regularly and on time
- With some personal loans, there are penalties for paying it off earlier than the pre-agreed term. Ideally, seek out those without pre-payment fines
- These loans typically have one-off origination fees attached. These can vary in amount from 1% to 6% of the loan’s total sum
- Further funds may be available post-application. It’s often possible to request a higher amount or sometimes be offered a larger sum if needed