Sooner or later, most people need to borrow money in some form. It can be a mortgage loan or a car loan but it can also be a private loan that goes to a renovation, a trip abroad or a new TV etc. If you have good finances it is usually not so big a problem to get a loan or get a reasonable interest rate but if you do not have the best financial situation, it can be a little more difficult.
In this article, we were going to go through a few different good tips with things you can think of and do to increase your chance of being approved when applying for a loan. What to keep in mind is that there are no super tips on how to deceive the system to get approved or how to do to get a loan when you have too bad finances. Our tips are pretty much about managing their finances in a way that lenders think it looks good.
Fixed income / annual income
One of the more important requirements when borrowing money is that you have some type of income. It may vary slightly between different lenders if they require you to have a fixed income (ie you receive a salary / income every month) or if they only require you to earn a certain amount at least every year. Such an amount usually amounts to USD 120,000 a year but can also be a little higher or a little lower.
When there are basic conditions that a lender sets out, these are things that usually have to be met if you are going to be able to borrow. That you have reached their age limit, that you have a certain income and that you do not have payment notes are such conditions. If you do not meet them, it will usually be a no directly on the loan application. It is therefore often important that you have some type of income when you want to borrow money.
The best tip is of course to make sure you have a permanent job so that you have good income. Then the bank can see that you have a stable economy and that money comes in constantly. In such cases, the bank feels safer to lend you money. However, if you do not have a permanent job, do not despair. You can have good income even without a permanent employment – for example from investments, own company or extra pay. Then look for lenders who only require you to have a certain annual income, so there should be no problems.
Avoid payment remarks
Having a payment note or several puts very easily in the wheel for you in several different areas – taking a loan is one of them. Most lenders say no automatically when you have payment notes because they see such as a sign that you are not managing your finances as well as you should.
The simplest and best tip is to make sure you do not receive any payment notes. Such hassles are only for you and they last for a whole three years, so you will suffer a good while if you happen to pull one. If you take care of your debts and bills and pay them on time, you run the risk of not getting any remarks and then it is clearly easier to take out a loan.
Of course, if you already have a payment note, this advice is not so good – it’s a little late. However, it is never too late to review its finances and make it better. Payment remarks can arise from sheer carelessness or misfortune sometimes and it is therefore not certain that they fully reflect the truth. It is not a given that you have a bad economy just because you have a note. It may also be that you got your remark a couple of years ago and currently have a much better economy. However, if that is not the case in your case, you should look over your finances and try to fix it. Furthermore, if you have a bad economy, a loan is not the right solution. A loan only increases your monthly expenses further.
For those who already have a payment note and who still have enough finances to be able to take out a loan and repay it without any problems, there are still some possibilities. Although most lenders refuse to lend you, there are still some who approve that you borrow despite remarks. There are often limitations in how much you can borrow or that you have to have a co-applicant etc. In addition to this, you can also expect to pay a little higher interest rate for your loan because the lender feels that the risk is a little higher for your loan.
Do not apply for lots of loans
When you are looking for a loan, you may think that it is logical to apply to a number of different lenders and see who will approve the application. This strategy is perhaps most common among people who have slightly worse financial conditions and may be on the verge of meeting the requirements. If you have a strong economy and know that you meet all the requirements, you do not need to apply in so many different places, but basically just choose the bank / lender that you feel is best.
Although one can understand the idea behind applying to many different lenders, it must still be pointed out that this is not a particularly good approach. Every time you submit a loan application, the lender does a credit check on you with a credit reporting company. Such credit information is used to see how your finances look, so that you can decide whether or not to borrow money.