Whenever you think of making a big purchase in your life, one thing that keeps bothering you is the prearrangement of funds.
Whether professional or personal, every novel phase requires enough money to take care of the immediate requirements. At the same time, there are different approaches to build savings to meet long-term needs. One of the most preferred medium of arranging funds quickly is through a loan.
A loan meets your fund’s requirement quickly. But there’s a catch. Not everyone who applies for a loan gets the money disbursed quickly. This is because there is a likelihood of loan application rejection. There are some factors that affect your loan application approval.
Consider using payday loans eligibility checker before applying for any kind of loan. It will help you know the eligibility criteria and save your time in the entire loan processing.
There are some factors that lending institutions check before approving your loan application. Go through each and every point to secure a loan without hindrance.
Consider these factors before applying for a loan to get instant approvals
If you are thinking of buying a car or a house, you will need a loan for it. Various banks, financial institutions, and direct lending sources offer Loans.
There are factors that lenders check before providing a large amount of money.
Credit Score Matters
The status of your credit score highly impacts the approval of your loan application. It is determined on the basis of your former credit repayments and borrowing habit.
Before applying for any loan, you have to check your credit score if you don’t want to face rejection. The higher the credit score, the higher the chances of mortgage approval.
A good credit score also helps you to get decent deals on your loan in terms of interest, tenure, and monthly repays. You can check your eligibility with a payday loans eligibility checker to save your effort and time in the whole process.
Amount of down payment
Lenders expect a percentage of the down payment to be given against a home loan or car mortgage. This is done to provide you with equity in that asset and provide a sense of security to your lender that you will pay the rest of the amount as decided.
It is up to you how much you desire to put into the down payment. It generally ranges from 3% to 60%. For instance, if you choose 30% to pay as the down payment for acquiring a particular asset, you will apply for the rest 70% over a mortgage.
Most lenders don’t take less than 5% of the down payment against any asset. But you may have an excellent repayment history and are highly qualified in paying off your borrowed money. You can also get your mortgage approved with 3% of the down payment.
Current debts commitments
Several debts are not considered a problem in loan approval. But debts that have been left unpaid always concern a lender. A lender will gauge your financial situation by checking your repayment behaviour.
You are missing your repayments for any debts or making payments after assigned due date or unpaid dues. This will place a hurdle in your loan approval.
To avoid this situation from happening, you have to be disciplined with your credit payments. This will increase the likelihood of getting your loan sanctioned with a nominal rate of interest.
Your occupation history
Most people earn money through a job. If you also fall under service class, then your lender would like to know your occupation situation. They will check whether you have a steady source of income or not.
Lending institutions might never call your boss to check if they are planning to fire you or not. They will just check the record of your employment. They will look at how long you have been working for your company to estimate that you will continue working for them simply.
In addition, if you have recently jumped to a new company for higher pay. The lender might consider the income unreliable.
Applied for multiple loans
If you have already submitted several applications for loans in a short duration, then consider it a red flag.
Lenders can check this detail, might get concerned, and consider your application to be the default one. Looking at the number of loan inquiries on your credit record, they can reject your application.
Every time you request any kind of mortgage—credit cards, loans, personal loans, a tough inquiry is employed on your loan application.
Such enquires can last for more than a year. If you really want to shop for loans to get the best deals. There should be at least 6 months of a gap before moving to the next lender for the inquiry.
Suppose you understand these factors and keep them all in check. This will put you in a situation where you will never face rejection on your mortgage when you need it the most.
Try paying off your debts to increase your creditworthiness. Manage all your debts by not skipping any of the repayments. This will augment your credit score and help you secure a loan at the nominal interest rate.
Consider checking your eligibility with payday loans eligibility checker to gain an understanding of your current suitability for the loan.
Avoid applying to too many places for credit. Try keeping your income stable. This will help you maximize your chances of getting approval for your loan application
Lisa Ann has developed a well-experienced professional career. From managing the staff of more than 50+ loan experts at Fastmoneyfinance to boosting the delivery of various loan offers, she has acquired many challenging roles to come out with the best results for the company. Lisa Ann is a Senior Content Author and the Chief Financial Advisor at Fastmoneyfinance. To back her massive experience in the UK’s financial industry, she has the postgraduate degree and diploma in Business and Finance.