Obtaining a personal loan is one of the best ways to get a little extra cash to complete the home project you have been thinking about, pay for a long-overdue vacation, or catch up on some bills. It is one way that consumers can live a little bit above their everyday income levels, giving the option to get the money now and then pay it back in payments, with some interest tacked on.
It is one of the most common ways that people get that extra cash, other than selling everything they own or borrowing from a family member. The thing is, though, that it may not be easy to get for you, depending on various aspects of your financial and work history.
Luckily for you, there are 10 tips to increase your chances of getting a personal loan that will help you get the cash you need. Of course, not all of them will apply to you, or maybe they will, but what is essential is to follow all of them that do. This must be done before you try applying for any loans if you want a better chance of obtaining them. Let’s dive right in and take a look.
Get Your Finances In Order
The first thing you need to do when discussing financial transactions is to get your finances in order. Find an application on your mobile device, or website on your computer, to get your entire credit score. You will want your score to be above 610 in the least, with as clean a credit history as possible.
While checking out your credit history, you can look a little bit deeper into your personal history. There is not much you can do to this without a substantial amount of time, so take care of this from the time you turn 18. This shows how stable you are by detailing how long you have been at a job, how long you have been in your home, and how well you pay your bills. This will even count against you if you change jobs for a better position, so before applying for a loan, make this look as stable as you can, for as far back as possible.
Check You FOIR
If this is not a term you are familiar with, that is OK. Many people do not have a clue what it is. In a nutshell, your FOIR is the debt-to-income that you have. This will show the lender how much disposable income you have every month, showing them how likely you are to be able to pay back the loan over the long term.
How to figure this amount out for yourself is actually really simple. All it takes is to add all your financial obligations together, divide that number by your monthly income, and then multiply that number by 100. Ideally, you want this number to be higher than 40%. The higher the number, the more disposable money you have, drastically increasing your chances of getting a personal loan.
Compare Your Options From Numerous Lenders
It doesn’t matter if you have always conducted financial business through your family bank. You want to shop around and find the best loan that you can see that will cost you the least amount of money. The best way to check out a personal loan comparison is to go online to a comparison site, such as iSelect, and input the information they ask for.
This site will send you offers from some of their partner sites, removing one of the most time-consuming aspects of the process. Now you need to read through the offers and contracts and pick out some that show you the most promise.
Check Out The Lenders Requirements
When reading through the offers of those you are considering, you should have noticed the section detailing the lender’s requirements. If not, do a little research or call them and ask. The point is to get a detailed list of requirements that they need and see if you qualify. If not, move on to your next choice until you find one that will work for you.
Apply For A Specific Amount
The lender will want to know how much money you need and why you need it. They honestly will not care so much about why you want it as long as you can show them why you need the amount you are asking for. If you go in without a plan and tell the lender that you need the most money you can get so you can have it on hand for when you want it, more than likely, you will be denied. Have a plan with documents to show it, and stick with it.
Stick With What You Know
You have already completed a comparison of all the offers and researched the ones you are considering. Now you need to apply. You know that your credit score takes a hard hit every time you apply for a loan. This may not seem like a big deal, but if you apply for three or four loans, you will take that same hit three or four times, which will add up to lowering your credit score below what you want.
Length Of The Loan
Opting for the longest term for the loan will increase your odds of getting it because it will place your monthly payment lower than it would generally be. This smaller amount will look better when the bank does some of its equations, which decreases your risk score. Keep in mind, however, that the longer the term is, the more you pay in interest, so there is a trade-off you need to know about.
Add A Co-Signer
If your credit score or history is not great, find a friend, relative, or partner to co-sign for the loan with you. This increases the likelihood of the loan being paid off without any issues because the person signing on the dotted line with you will not want to be stuck holding the bag. If you do not pay it, they will be obligated to do so, making you a much lower risk for the lender you are going through.
Include All Monthly And Yearly Income
You may not think that the end-of-the-year bonus will matter or that the second job you picked up on the weekends will help you get the loan, but you would be wrong. You want to include every form of income you have when filling out an application, at least all the ones you can show documentation for. The more money you have coming in to the household, the better you look on paper, which is how a lender decides on your application.
Ensure All Information Is Complete And Accurate
Like most applications, there may be some sections you do not think should apply to you, but it is important to fill every section out. Even if you have to put a N/A in the box, it is better than leaving it empty. Plus, when filling out the loan, ensure everything is spelled correctly and that all the information you have put down can be proven through IDs, bills, pay stubs, and so on.
Final Thoughts
Having a chance of getting the personal loan that you need does not have to be something left up to chance. In fact, if you approach the task with that type of mindset, you might as well not approach it at all. Take the time to do your comparisons and research, look through your options, and pick the best lender.