There are many reasons why you want to apply for a personal loan. Perhaps you’d like to consolidate your debt, buy a car, go on a holiday, improve your home, or get married. Whatever the reason is, a personal loan is one way to help you achieve your dreams soon. As such, here are some tips that will increase the likelihood of your loan being approved:
See to it that you meet the criteria
No matter what type of personal loans you are applying for, you need to be at least 21 years old, must be a citizen of the country, meet the minimum income requirements, not going through the process of bankruptcy, and must have a good credit rating. Check out the cheapest personal loan in Singapore here to know more.
Maintain a Good Credit History
Your credit history will be your solid proof of good repayment behavior. If you have an outstanding credit history, this can help you with the approval of your loan. Any credit card delinquency, unpaid loans, dishonest loan purpose, and bounced checks are red flags that will affect your application process. Check out the cheapest personal loan in Singapore here to know more.
Get Pre-Qualified by Different Lenders
Don’t fall for the rates advertised by the banks on their websites. Only the qualified borrowers will be qualified for these rates. You must research the terms that the bank will offer to you. You can get pre-qualified for personal loans without affecting any points on your credit score.
Many banks have a soft credit check during the pre-qualification process. This will not affect your credit score, unlike a hard inquiry. Meanwhile, a soft inquiry will show on your credit report. Lenders will just have to look at your credit history to have a decision about whether they should give you the money or not.
The pre-qualification process might feel like an official loan application. This is because you will provide your personal information, monthly debts, income, and employer’s information. However, this will not yet result in official approval. Lending companies will still send you an offer with conditions that you must meet in case you wish to take the loan. You can use this to compare the options that you have.
As you select the loan, finalise the process by accepting the terms and conditions by the lender. Then, the lender will ask for documentation of income, proof of identification, and authorisation to have a hard inquiry. When you authorise the hard pull on your credit, your credit score will drop for a few points. As such, make sure that you select the offer wisely to avoid multiple inquiries on your credit report.
Places to Get a Personal Loan
Banks are always the first option of lenders seeking a personal loan. Indeed, this can be a good option for borrowers who have higher credit scores. This is because traditional banks have stricter qualification requirements for income and credit scores. Banks do offer lower interest rates versus bad credit borrowers.
National banks have several branches for those who wish to inquire in person. Meanwhile, you might also find it more comfortable to apply on the website of the bank that you already use.
Meanwhile, credit unions are now widely accessible and this can be one of the best places to get a personal loan with lower rates. They also offer less rigid requirements for the members.
Members for nonprofits compose credit unions. As such, they can have generous interest rates and fees versus profit lenders. If you have established a positive relationship with your credit union, then they might be willing to lend you money.
However, you need to become a member if you wish to apply for a personal loan from a credit union. Becoming a member will require you to live in a certain country. You will also be required to be employed as a specific organisation. Sometimes, there are credit unions that will only require you to fill out an application form or pay a small membership fee to be a member.
On the other hand, online personal lenders offer competitive rates. Their requirements are easier than credit unions and banks. Their application process is much faster, and they have same-day funding.
Many online lenders check other factors more than your credit history. They also check your banking activity and job history. This is helpful especially when your credit score is not good.
Even if your credit is good, some online lenders will offer low-interest fees and rates versus credit unions and traditional banks. This is because they don’t need to cover overhead costs. Furthermore, the applications are done online and the lenders can offer a quick turnaround in approving your loan.
Read the Fine Print
You must read the terms and conditions for any loan. This includes fees and repayment options. This can help you avoid problems in the end. Ask the lender for the full disclosure of the loan. Read and understand the fine print.
So now, it’s time to find the low interest loan here.