Most people don’t really like to take a loan because of the long-term implications and the repayment stress involved. But sometimes, the need to take a loan is unavoidable. You may require extra funds for a number of reasons, such as your children’s education; a new home; a home extension; a new car; your daughter’s wedding; or even a much-needed family holiday. Maybe even to settle a debt.
There are specific loans available today, and you will obviously apply for one based on your needs. And you will look for easy loans. The different types of loans available include:
- Personal loans
- Car loans
- Home loans
- Home improvement loans
- Student loans
- Business loans
- Travel loans/Holiday loans
- Debt consolidation loans
- Wedding loans, etc.
Before you apply for a loan, it is important to do your due diligence thoroughly. Check out the most reliable lenders and see what they have to offer. Who offers the most favourable terms? Who offers the best low interest loans? What are their processing fees and repayment terms? What are the penalties imposed on delays and defaults? And which lender has the least complicated application process and offers the most easily available loans? How long does it take to get the loan approved?
After you check out all these factors, do some more research to ascertain what you need to do to apply for a loan. What are the various criteria that you need to meet to qualify for a loan? What documents will you need to submit along with your loan application? And who is likely to approve your loan at the earliest?
Try to understand all the reasons that are behind loan applications not being approved, and try to pre-empt this happening to you. Some of the most common reasons include:
- Errors in credit reporting: Submitting incorrect information can affect your credit score, and hence, impact your chances of getting a loan. This could mean submitting personal information that is out-of-date; whether there are any adverse notices on your file due to an earlier loan application having been rejected; and whether a debt has been listed twice by mistake.
- Lenders ability to service a loan: The lender is responsible under the National Consumer Credit Protection Act 2009 to provide a loan that is appropriate to your needs and has to conduct a suitability assessment accordingly. Hence, the lender is expected to be au fait with your financial condition and your ability to repay the loan based on your income, loan amount, your expenses and liabilities. If the assessment reveals your inability to meet the terms and conditions of the loan, then your application will be rejected.
- Too many outstanding debts: In case you’re applying for a personal loan in order to consolidate your existing debts, do remember, that if you owe too many large amounts of money that are outstanding, it may be detrimental to your chances of getting a loan, especially if a large amount of your income (debt to income ratio) is already being used to pay your existing debts. So, do try to clear as many of your debts as possible before applying for a loan.
- Unstable employment and income track record: If you have moved from job-to-job resulting in irregular income, it will reflect on your financial status and ability to repay your loans.
- Vague credit history: If your credit history reveals irregular repayment patterns on existing debts or outstanding payments overdue beyond 60 days; or alternatively, if you have not built up a credit history and hence, lenders cannot gauge your financial status, then the chances of your application being rejected are quite high.
Do keep all these factors in mind before you apply for a loan. Understanding the implications of your financial track record and ability to meet all the criteria involved, may help you plan accordingly to submit an application that is beneficial for you. And can make you eligible for the most easily available loans.