People take out loans for various reasons and it is not only the needy who do. There are people who have strong finances, yet they apply for a loan to inject capital for personal, business, or education. People secure a loan to fund the shortfall and they can avail this loan from a bank which is a traditional lender and other non-bank lending institutions
There are different types of loans being offered. The borrower can choose based on the purpose. The most sought-after loans are personal, home, business and car loans.
Planning to take out a loan for your needs? Check out these tips on how to get qualified.
Be ready with the basic requirements.
Certain documents are needed before you can get approved for any kind of loan. You must provide all of them because they serve as proof of your personal and financial information. Requirements may vary from one lender to another, but these are the usual documents that lenders ask from the borrower, aside from the application form.
- Proof of identity. This is a mandatory requirement every lender asks from the borrower. A valid ID helps the lender perform background checks on the credibility of the applicant. Some lenders may also Income Tax Returns for some types of loans, as additional proof.
- Proof of residence. Your living situation determines how secure and stable your lifestyle is which is why lenders require this document. This can be easily obtained as you can use the voter registration card, utility bill, and lease or rental agreement as proof.
Have a steady source of income.
Your source of income will serve as the lender’s basis on where you’re heading to, especially when it comes to your finances. Make sure you can provide proof of your current income. If you are borrowing for business purposes, a projection of your future source of income might also matter, as proof that the business is profitable and doing well.
Borrowers who have steady employment are preferred by most lenders. If you haven’t changed jobs too recently and you have no gaps in your employment history, it would be a plus.
Be knowledgeable about your credit score and history.
A a person’s creditworthiness is based on his or her credit history and score. There is a high chance that you will get prioritized for a loan if you have a good or excellent credit scores equivalent to 690 and above.
Your credit score and history may determine the amount of the loan that can be granted, as well as the interest rate applicable. However, there are lenders today that will offer you to borrow money online even with bad credit. The application may still be processed but with lower loan amounts, higher interest rates and tighter loan agreements.
Prepare your co-maker or a guarantor.
If the borrower is applying for a huge amount, a guarantor is often required by the lender. If the borrower fails to fulfill the loan obligations, the guarantor agrees to repay the debt in full, on behalf. If you want to borrow larger amounts and for longer tenures, having your parent, spouse or sibling as a co-applicant is an advantage.