How to Qualify for a Loan?
Loans are usually available to anyone who can securely repay them. Depending on your credit history, you may have better rates with some lenders than others, but generally lenders do not require you to have perfect credit in order to qualify for a loan. You will need to meet certain criteria in order to receive each type of loan, however. Below are the steps you should take in order to qualify for a loan.
Step 1- Determine what type of loan you are applying for
There are several types of loans that are available, including payday loans, personal loans, mortgages, educational loans and title loans. Each type is designed for a different reason, but each also has its own eligibility requirements. A personal loan, for example, is meant to be used for the sole purchase of a non-necessity. Therefore, you should not use this type of loan to make payments on other loans or bills. Most personal loans also require good credit scores and proof of steady income. A mortgage, on the other hand, requires excellent credit history and proof that you can pay it back. Mortgages are typically used for the purchase of property, and they usually require a larger sum than most other loans. Educational and credit cards both have their own requirements too, so be sure to find out more about them if you need either one.
Step 2- Gather all necessary documents
Each loan has its own requirements, and some may require more information than others. Regardless of each requirement, however, you should usually be able to obtain most documents online. You may need your credit score, salary history and tax returns, for example. If you are applying for a mortgage or car loan it is likely that you will need to pay for an appraisal of the property or vehicle, as well. If any of the required documents are not available to you online, you should have them prepared and ready to send before applying for a loan.
Step 3- Fill out application
Once you have determined what type of loan you need and which documents will be necessary to apply for it, you can fill out your application. You may either do this online or by submitting the forms that come with the loan offer if none are available online. You will then need to submit everything that has been requested of you at one time in order to complete your application process successfully.
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Step 4- Wait for approval (if necessary)
Your lender will let you know whether or not they approve your within several days after receiving all of the requirements of your loan. If you are approved, you will have to wait for your funds to become available before you can use them. However, if you are not approved for a loan it is likely that this is due to some type of discrepancy with either what was submitted or how much money the lender would be willing to lend you based on your credit history.
Step 5- Rejoice and repay
If everything goes as planned and your application does go through, congratulations! You now know how to qualify for a loan. This may now mean that you can purchase that new TV or car or maybe even just take a vacation now that your loan has been approved by the lender. However, whatever you decide to do with this newly acquired spending power, make sure to repay your loan on time in order to avoid penalties.
Step 6- Build good credit history (if not already established)
If you do not have an excellent credit history that influences the interest rate of your loan or if you are applying for a personal loan that means you will, in most cases, need to build one with the help of the lender before they can approve your application. This entails making all monthly payments according to the terms of your agreement and never missing any due date or overspending what was lent to you. If you do this, it will usually be reflected in your credit score within several months and may even help improve it enough so that you can qualify for other loans in the future without having to go through this initial process.
Depending on what you are taking the loan out for you may or may not be qualified to get it. Most people are shocked when they find out that they do not have good enough credit to take out a payday or personal loan. Your credit is one of the deciding factors on whether or not you get that loan. Don’t fret too much, you may still get the loan however, it will be at a steep interest rate. Besides having good credit, what else determines if you are or are not qualified for a loan? According to an article on Entrepreneur, your loan lender first wants to know that, if they give you money, they will get it back. Their number one priority is not getting you the money but ensuring that they will get their money back.
Funny thing is (not really that funny), the lender doesn’t care how long it takes you to pay them back because they will likely be charging you a high interest rate anyways. If you are looking to increase your chances of scoring a loan you should follow these suggests: have a good repayment plan, consider renting what you are looking to buy, put up some of your own money, check out your credit report first, and shop around for various lenders. Your lender also wants to know if you: have a job, your other open accounts, and what type of college (if any) you have.