Instant loan approval tips
Applying for a loan is easier than you think; follow these tips to ensure a loan approval.
Loan approval is something you can plan for. If you know what lenders require of you, you can easily prepare and ensure that your loan is approved for even the most pricey and elusive items.
When looking for a loan make sure that you know what type of loan you need and how much you need to borrow. Once you have this information begin to look for lenders who offer the type of loan you would like to apply for. When you have decided on the lenders you want to apply to make sure to make a list of what each individual lender requires from you. Do all your homework before you hit the apply button.
Type of loans
Knowing the type of loan you need to apply for is the most important first step. The type of loan that you apply for will heavily depend on what you want to use the loan for. For example, vehicle finance is specifically for buying a car but there is also vehicle finance for caravans and motorbikes out there. Or if you are buying a house then you will specifically be applying for a home loan.
The next question will be how much do you need to borrow as this will also have a bearing on the type of loan that would best suit your needs. If you are needing a small amount that you will be able to pay back with your next paycheck then you could apply for a payday loan or a quick loan but if you are needing a larger amount that you will only be able to pay back over, for example, 12 months then a personal loan will be better suited to your needs.
Each different type of loans available, such as personal loans, business loans, mortgages, and car loans to name a few, come with their own sets of documents and informational requirements.
Here is a quick guide to the different types of loans available to you:
- Business loan- Apply for a business loan if you need money to finance your business or if you want to finance a new business venture.
- Personal loan- apply for a personal loan if you want to spend money on something that is personal such as buying a new phone or paying for a trip or wedding. If you have an emergency like a medical bill or vehicle repair you could apply for a payday loan or a fast loan which are also forms of personal loans but the timeframe to pay them back vary.
- Bad credit loan- A loan for people with bad credit is if you want to do one of the above but do not have a high enough credit score to meet the credit requirements of the loan.
- Debt consolidation loan- Debt consolidation loans are there to help you manage your debt. This loan is different from other types of loans as its purpose is to settle all your outstanding debt. It is possible to save on interest as you will only have one, single repayment per month as opposed to several high-interest bearing accounts.
- Home loan- A home loan or mortgage is a specific secured loan where the property that you are buying is funded with this money and it acts as the security for the loan. These loans are paid back over long periods of time due to their size. This timeframe is usually about 20 years.
- Car loan- Vehicle finance is a loan that is taken out to pay for a car, caravan, motorcycle and in some cases even a boat. These loans usually stretch the period of 5 to 6 years.
Applying for a loan requires you to submit a number of basic documentation and information. These are requirements you will find at any reputable lender. These requirements are usually:
- Being 18 years or older
- South African citizen
- Identification document
- 3 months bank statements
- Three latest payslips
- Proof of residence
It is not uncommon to see loans rejected because basic documentation was not submitted accordingly. This is a very preventable mistake. When applying for a loan, ensure that you know what documentation you need to submit. Having a checklist assist you in not missing any of the required documents. You should also always make sure if the lender requires the documents to be certified or just copies.
Loan type requirements
As mentioned before each loan type carries with it, a set of lender requirements. In order for you to prepare accordingly, you would need to know exactly what the requirements are for the loan type you wish to apply for. It also gives you an overview of whether you would qualify for your chosen loan type.
This is particularly important when considering secured loan types. These loans require you to put forward an agreed asset should you default on your repayment.
If you are considering a home loan or business loan, loans that are for large sums of money, then you much make sure you have all the required documentation as the lender will need to do a thorough check. These documents may include, business financials as well as comprehensive business plans.
Another preventable reason why loan applications are often rejected is if you apply for a loan amount above what you need or can afford.
Most lenders offer an affordability calculator on their websites. You can put in your loan amount and see your estimated monthly payments due. Make sure that you are honest with yourself when looking at what you will need to pay back. Do a budget of your monthly expenses with this added in to ensure that you can afford the repayments.
It is also important to make sure that you are aware of all of the fees and other costs that may be associated with your loan. Most lenders will charge a once-off initiation fee and a monthly admin fee. Did you know that when you buy a house the lender will require you to have a life policy ceded to the bank to pay off the loan should you pass away? Have you made provision for this in your budget?
Stick to a loan amount that you need to take care of your financial needs and is well within your budget. Lenders want to see that you are financially able to repay the loan so should you apply for an amount that is not within your repayment ability, your application might be rejected. However, had you requested a reasonable loan amount, you might have enjoyed quick loan approval.
Quick loan calculator
Loan application with Bad credit
If you have a bad credit score or history, you will be relieved to know that there are lenders that cater for your specific loan requirements. Often the interest rate associated with bad credit loans is higher than other standard loan types. To qualify for such a loan, you would need to apply specifically for a bad credit loan.
Research loan and lender options
We have covered the importance of knowing the different loan types available to you. Researching the types of loans you might be interested in can help you better prepare for your loan application.
Lastly, another tip to securing loan approval is to research the different lenders available to you. Today, more than ever, there is a wider variety of lenders willing to offer you a loan. There is a financial solution to your current needs. Make sure that you research their fees as well as the different interest rates to make sure you are getting the best deal for you.
So, next time you are in need of a loan, keep these tips in mind to ensure approval, the first time!