How to get a loan – Tips for simplifying the process
When thinking about applying for a loan individuals need to consider a number of factors. The first step would include deciding on the type of loan required. This will help to guide you on how to prepare for the application process.
For instance, applying for a home loan is not the same as applying for a personal loan. It’s also important to keep in mind that each personal loan application counts as an inquiry on your credit report.
How to get a loan:
Avoid applying for too many loans – If a lending institution notices that you have applied for more credit during the application process, this may result in them declining your application. They may consider you to be over-indebted, meaning that in all likelihood you may not be able to afford to make repayments comfortably and on time every month.
Check the eligibility criteria thoroughly:
Make sure that you have sufficient income so that you can afford to make repayments. If the application says that you need to have income of R6000 per month and you earn R4000 per month, you aren’t likely to qualify. Before sending your application, make sure that you check all details of the application so that you don’t waste your time or that of the lender.
Be clear about how you will be using the loan. You need to have a credible purpose for applying.
If you will be using the loan for home renovations, be sure to make this clear when you apply. This will show lenders that you have a genuine reason for applying for extra funds and that you will use the loan for exactly what you said it was for. By being as transparent as possible about the reason for your loan application you improve your chances of approval.
Application details should be consistent:
If you apply online and say you are employed full-time, but when you are invited for an interview with a consultant and you say you are employed on a part-time basis, this is likely to have a negative effect on your application. When you apply, be consistent about all your personal and employment details.
Having a stable form of employment is essential:
Most lending institutions are looking for low-risk loan applicants. For many lenders, having to take a risk on a loan applicant without stable employment simply means that they can charge a higher rate of interest in order to off-set the risk. As a loan applicant, you need to be able to show that you have remained employed consistently for a lengthy period of time, which means that you will be able to guarantee income, some of which can be used to repay the loan.
Make sure that you check the credit requirements before applying:
Keep your credit record clean and keep monitoring it to ensure that all information reflected is correct and up-to-date. Lending institutions generally require a good credit record, which indicates that individuals pose a lower risk and are likely to repay their loan on time. If you have a poor credit record, some loan providers may have loan solutions to offer, but these generally come with a high interest rate. Applying for this type of loan means that you need to be able to show your affordability.