Top Loan Approval Tips
At some point in your life, you will need to apply for a loan. Whether it's for your first house, to invest in property, to buy a new notebook computer or a car, loan approvals, most (but not all) lenders tend to look at similar factors before they make a decision. From home loans to car loans, to personal fast loans and business loans, there are universal strategies you can use to maximise the likelihood of your loan being approved by your lender.
1. Shop Around for the Right Lender
Shop around for the right lender and make sure you find a lender with a package that suits your needs. While criteria do not vary a lot between lenders, there may be lenders who have different expectations and are more likely to approve you for the loan that you're looking for.
2. Employment Record and Supporting Documents
Most lenders will require a good employment record or evidence of stable employment. For smaller loans, lender will often only require that you're currently in employment. Make sure you have reference letters, bank statements, ready referees, or other forms of verification available when you apply.
Make sure you include any assets you own on your loan application. These can be gifted funds, savings balance, term deposits, share and other investments. The more assets you have, the more likely your loan will be approved.
4. Other Debt Commitments
As a general rule, the higher the credit card limits on your existing credit cards, the more you will be borrow. A person with an unused $10,000 credit card limit can borrow more than someone with a combined credit card limit of $5,000. If you are offered a higher credit card limit, always accept it as long as you know you won't abuse it.
5. Saving and Credit History
A good saving history shows the lender that you're a good risk for repayments. If you've ever applied for credit or a loan, you will usually be listed with a credit agency and have a credit file. If you have a poor credit history, then lenders, especially for larger sum such as home loans, will be less likely to approve your loan. In the past you might have defaulted on a credit card or personal cash loans, or even mobile phone bills. Past credit rejections are also recorded on your credit file. Declines for pre-approvals for mortgages may also go on your credit file. Start setting down a good saving and credit history as early as possible.
Present your application well and make it look as professional as possible. This shows the lender that you're serious about the loan and about making good on the repayments.
7. Be Honest
Always be honest on your application because you will need to verify your claims with supporting evidence. Any inconsistencies can be easily checked out by the lender.
8. Find a Guarantor
If you've never borrowed before, are applying for a large loan, and have a poor credit history, consider using a guarantor to secure your loan. Your guarantor should have a good credit history.
Mortgages - Small Deposits
There is a special tip for mortgages. If you are going to be very highly leveraged (your deposit is very small for the amount you need to borrow and you're borrowing more than 80 per cent of the price), then you might be required to obtain lenders mortgage insurance. If this applies to you, try and find some purchase partners or have family members chip in for the deposit to minimise your need for insurance. A bigger deposit will mean your loan will be more likely to be approved because you are borrowing less.