Applying for a loan can be stressful and confusing. With many lenders are offering comparable products with enticing introductory rates and features, it can be difficult to the sperate fact from fiction. Loans can be a good way of getting on top of debts or getting what you want quickly, but how can you ensure you are approved? Well, here are 5 tips that would help you in doing so:
5 – Tips to help you get your loan approved
1. Know what you want
The first thing you should be asking yourself before you apply for a loan is “what do I need the money for?” the answer to this question can help you find the best loan for you. If you are in the market for a new car, then a secured personal loan is probably your best bet but this service will not be available to you if you want some extra cash for a holiday.
While it may tempting to take out a loan for your next holiday, it’s advisable only to take out a loan if you need to. Successfully paying off a small loan looks great when it comes time to apply for a new one, but please don’t get into debt unless you absolutely have to.
Once you have determined what type of loan you are after, do some research and compare the market. The big four banks have their place, but smaller local lenders may offer the best personal loans in Australia, so don’t be afraid to shop around. Be wary of introductory interest rates, these low-interest rates are designed to entice you into taking out a loan, and may not remain low in the second year of the loan.
3. Develop a saving habit
When lenders asses your loan application, they will take into account many factors. Depending on your financial history, you may be deemed “safe” and offered a low-interest rate. One of the best ways to raise your chances of being approved is to have a strong history of savings. A demonstrated ability to save money is a green light for many lenders, so get saving!
4. Get rid of other debts
Perhaps you want a low-interest rate loan in order to consolidate higher-interest debts (like those that come with a credit card) This is a wise move and looks good on your credit history. If you are applying for a loan for other reasons, it might be a good idea to reduce other debts before you apply. Outstanding debts are a red flag for lenders, and depending on your level of debt, you may be denied on the spot. If you are in debt, then it would be advisable to reduce this debt before taking on more.
5. Demonstrate stability
In the eyes of a lender, stability is safe. When you take out a loan, the repayment rate is calculated by the amount of risk you present as a borrower. Full-time work is a good indication that you are a stable individual with no issues when it comes to paying back debts. By staying at your job for more than four years and receiving regular income you raise the chances of your application being approved tenfold.
Applying for a loan can be heart-wrenching, especially if it is denied. On the off chance, you are denied, don’t beat yourself up, realize that perhaps your application was rejected for a good reason. Lenders aren’t in the business of losing money, and they rarely lend to those who won’t be able to make repayments comfortably. By maintaining a stable job and home life, as well as proving financial responsibility, you increase your chances of being approved.
Article Submitted By Community Writer