It used to be quite easy to obtain credit of any kind years ago. With the GFC and more and more Australian’s not being able to afford to pay back loans and defaulting. banks and financial lenders are making it increasingly hard to obtain a loan or credit card.
So how can you make sure you will get approved? Here are five tips to get you on your way:
1. Find out your options
Before heading to your bank, check out loan packages online and see what competitors are offering. You need to be aware of what kind of loan you are looking for, the terms you can reasonably afford, and your goal for paying off the loan as fast as possible. If you are looking for a specific type of loan (auto, mortgage, personal) make sure you find the best deal for you. There may be many loan offers arriving in your mailbox, but check out the fine print before going further. A lot of people have found themselves in financial trouble by not reading the fine print and paying an exorbitant amount of interest, so be very careful and wary of what you are signing.
2. Ask questions
When you find the loan package you are most interested in, contact the lender directly to find out upfront what the requirements are for loan eligibility.
3. Know your limitations
If you are pursuing a loan, you should already be aware of your credit history. Lenders today will rely heavily on your past usage of credit. Consider your financial limitations when planning for a loan. Apply for the loan based on your financial ability to make repayments you can afford and make allowances for interest rate rises.
4. Create a checklist
Based on the information from the bank, it’s wise to create a checklist of the appropriate documentation needed for the loan application. It can take some time to secure the documents you need from your employer, and other financial resources. Incomplete applications can be a cause for loan denial.
5. Have the right expectations
Again, applying for a loan when you’re in a hurry is never a good idea. Loan officers have a certain protocol for approving a loan and getting you the money. During the process, make sure to discuss the sequence of events so you’ll have an idea of when to expect an answer.
While some loans can be pre-approved upfront like Get Approved, it may take a while for the actual loan to be approved. Your goal will be to secure a loan you have the means to repay.
You may also need to outline the reasoning behind the loan. If it’s a personal loan, the lender might want to know how you plan to use the cash, for example, you may need it for home improvements or debt reduction. The loan process can be a frustrating one and if the loan you applied for is not approved, the lender may provide the specific reasoning behind the denial. It can be dangerous to your credit to continually apply for just any loan you think you may be able to get. Too many loan applications can ruin your credit and obliterate your chances of securing one in the near future.