Author: Lou Lobrin
If you’re reading this article, you’re likely looking to get your first loan approved.
Why do people get loans? Well, there are lots of reasons. Maybe you need money to pay off some bills or start a business. Perhaps you want to buy a house or car. Whatever the reason, getting a loan is an important step in growing your financial future. But how does the approval process work?
First, you fill out an application and send it with proof of income and other documents showing how much money you make each month. Then, the lender reviews everything and decides whether or not they want to loan you money.
If they decide yes, they’ll give you the money and set up an agreement with terms that state when they expect payment. They’ll also give you instructions on what steps to take before making any final payments so that everything goes smoothly between both parties involved.
The next section discusses ways to increase your chances of approval when applying for a loan.
- Credit history
Credit history is an essential factor when applying for a loan. It’s the only way to show that you’ve managed your finances responsibly. It’ll help lenders determine whether or not they should trust you with their money.
Your credit score indicates your financial stability, so it’s important to have a solid score before applying for any loan.
If you have bad credit, you can strengthen it before applying. Ways you can do so include immediately paying off any outstanding debts, making all payments on time and in full, and not applying for new credit cards or personal loans.
These practices are crucial if you’re trying to get approved for a home loan since on-time payments is a must. It’s also good to have pieces of loan documentation that include business and personal financial statements and income tax returns.
- Employment history
When you’re looking to get approved for your first loan, it can be hard to know what’s required. Personal Loan Woodlands lenders look at your employment history to ensure that you have a steady income and that you’ll be able to pay them back.
Having a stable employment history is important if you’re not currently employed. That means if you’ve been out of work for an extended period, you should consider getting a part-time job or doing freelance work until you find something full-time.
If you’re currently employed but are worried about the strength of your employment history, try applying for your next loan after six months instead of immediately. This way, it’ll be easier for the lender to see how stable your current position is.
- Placement of residence
A lender will want to know where you live and whether or not it’s a place you can afford. They’ll also want to see if you have any other properties, especially if they’re in different locations or countries. They want assurance that you’ll be able to pay back any loans they give you without selling off other assets.
If you have multiple properties, gather some documentation on each property so that you can show them where your money is coming from when applying for a loan. However, constantly moving around during a short period could be discouraging since this makes you look less stable to the bank.
- Payment history
Your income is only one aspect of your financial history that the lender will review. Your monthly debt obligations play a huge role in loan approvals as well.
If 75% of your income is allotted to paying off your debts, the lender will most likely conclude that you won’t be able to pay your new loan. Usually, the lender will require you to list certain debt obligations, such as payments towards credit cards and mortgage or rent payments.
Payment history is an important factor when applying for a loan. It tells the lender how well you handle paying back your debts. If you have a good payment history, you’re responsible and can be trusted to repay the loan on time. A bad payment history tells them you may not be a good risk.
An example is installment buying through personal loans. You can borrow the money for any purpose, but you pay the money back in monthly installments over time. Paying this off on time and in full makes you look reliable to lenders.
All-Around Stability
Getting your first loan approved is no easy feat. It takes a lot of work and dedication. However, it shouldn’t be too difficult once you’ve gotten used to the process.
The best way to get your first loan approved is by having good personal finances and stability. Make sure your credit score is high, and you have stable employment. If you can do these things, then there’s no reason why your loan won’t be approved.
About the Author
Lou Zandrian Lobrin
Marketing and Communications Manager, Asialink Finance Corporation
Lou Zandrian Lobrin is the Marketing & Communications Manager of AsiaLink Finance Corporation, one of the Philippines’ fastest-growing finance companies with 94 branches nationwide. He enjoys traveling, cultural immersion, and meeting new people outside work.