Apply for a loan today: The tips and checklist you need to get you ready!
Have you ever wanted to apply for a loan but gotten stuck before you even began? The requirements of regular lenders, the documents you need to prepare, as well as the lending criteria can be overwhelming. If you’re looking for loans with flexibility, unsecured personal loans are popular and simple types of loans among Kiwis. With a personal loan, you can apply for a loan and instantly know what your repayments are and when they are due. However, as with any loan, there are some important questions you need to ask yourself you apply for a loan. Here is a list of questions for you to take into consideration.
QUESTIONS TO CONSIDER BEFORE YOU APPLY FOR A LOAN
Will I be accepted?
It is difficult to be sure if your loan application will be accepted, however you can get a general sense of your prospects. Your credit report and credit score is one indicator of your financial stability. I won’t harm your credit score for you to check your report. In fact, it’s advisable to always check your own credit report in case there’s incorrect information on there that’s hurting you financially. There may even be some bad credit history that you’ve forgotten about. Unfortunately, this bad credit history can stay with you for up to 5 years and hurt your chances when you apply for a loan.
Furthermore, always check the loan provider’s requirements and criteria before you apply for a loan. This is because if you apply for a loan that you can’t afford and get rejected, it can harm your credit score! Many loan providers will let you know about their minimum credit score, cash flow requirements and other eligibility criteria.
How badly do I need the money?
Most people apply for loans when they really need the money. There may have been unexpected medical costs, car-related expenses or perhaps they just need help with a particularly expensive month. But there are also applicants who might not need the loan or have other means of funding that they haven’t considered. It is also important to consider if you are asking for the right loan amount. Asking for too much can lead to a loan rejection, but too little can lead to higher fees, which can make things difficult financially. If your answer to the question, “how much do you want to borrow” is “as much as possible”, it’s possible you need to rethink before you apply for a loan. When you apply for a loan, only borrow what you need, when you need it.
Am I applying for the right loan?
A personal loan is useful due to the nature of its flexibility. You could use it for a great number of reasons, including consolidating debts, unexpected expenses, travel or even a big purchase. However, there are other types of secured loans, such as car loans and home loans. These are generally larger and longer-term loans but will need collateral, such as a car or house. Many loan providers have an online loan calculator that will allow applicants to decide exactly how much they want to borrow, over how long a loan period and show them their expected repayments.
What is a good loan deal?
We all want the best loan deal. After all, no one wants to feel cheated when they decide to apply for a loan. The common understanding of a good loan deal is one with the lowest interest rates. However, you will also need to look at the entire loan package when you apply for a loan. Base interest rates aren’t the only potential fees that you might need to pay. Check if there are any fees for early repayments or additional fees that you might incur during your loan period. So, just because a loan package has a low base interest rate, does not make it the best loan deal if you’re slapped with tons of additional hidden fees and charges.
What are loan terms?
If you’ve used the loan calculator to get a better idea of your repayments and total cost, you’ll notice that these amounts are tied to a particular loan period. Flexibility in your loan might be something you need in case of future unexpected events. However, there may be additional costs associated with this flexibility.
After I apply for a loan, can I manage repayments?
This might be the most important consideration when you apply for a loan. Most loan providers will need a financial history of at least 90 days proving that you have a stable income. Perhaps you’ll need to choose a lower repayment option with a longer loan period. If this ensures that you’re able to meet your repayments without hardship or defaulting on payments, it could be the right option. Similarly, opting for a fixed personal loan rate can also protect you from unexpected fluctuations in loan rates. That way you’ll be sure to know how much you are paying, when you are paying it and when you will be done paying off your loan.
WHAT DOCUMENTS DO I NEED TO APPLY FOR A LOAN?
If you apply for a loan through a bank, you’ll need a fair bit of paperwork and documentation. This could include:
- Two forms of identification or 100 points of identification,
- Your most recent payslip,
- At least 3 months of proof of credited salary,
- Other income proofs such as rental income, government income or interest
- Bank account details,
- List of assets,
- Existing loans, and
- Regular expense details, including utilities, household costs and credit card transactions.
That’s quite a whirlwind of information! With Loan Peeper, our eligibility criteria are quite simple. All you’ll need is 100 points of ID, a regular income for 90 days, be a New Zealand resident or have permanent residency, and have a direct contact number. We’ll find a loan provider who can offer you the loan package that you want and need!
HOW TO APPLY FOR A LOAN AND GET APPROVED
If you’ve decided that you need some quick cash, there are several things you should do before you apply for a loan. Getting rejected because you were unprepared or made a faulty application will not only deny you the money you need but also hurt your credit score. Here are some tips to get yourself prepared before you apply for a loan so that you are sure to get approved!
Pay your existing loan repayments and all your bills (credit card, phone, electricity, other utilities) on time.
This shows that you are on top of your other financial obligations. Loan Peeper uses direct debit for repayments which allow us to schedule your loan repayments, saving you the hassle of remembering.
Be aware of your credit commitments.
Do your research before you re-apply for your loan. What are your other ongoing loans or debts? Making a number of loan applications within a short space of time will be not only be recorded on your credit report, it can harm it! In fact, it can be viewed as an indicator that you might be in credit stress! Applying with Loan Peeper saves you the trouble of applying to different loan providers. When you apply with us, we perform one credit check but look at many different, trusted loan providers. Therefore, you get the option of a few loan providers, without the problem of multiple credit checks!
If you’ve recently relocated or moved to a new place, make sure you’ve notified your lenders.
Be honest with your lenders and make sure all your bills are correctly re-directed so you’re not hurt in the long-term. If you don’t pay these bills, a credit infringement or overdue debt record will negatively impact your future credit report. And because it’ll show up on your credit report, your loan provider will find out about it anyway. Therefore, it’s always better to be honest and upfront when applying for a loan.
Keep your credit record updated.
Credit reports can be wrong or outdated. Therefore, it is important to proactively monitor your personal report by checking it regularly for erroneous entries. You can also track your credit report changes with credit alerts.
Stability in terms of your income, address or expenses is always a bonus when you apply for a loan.
To your loan provider, this means that there is a pattern that they can depend on when deciding to approve your loan application. If you’ve just switched careers, are still under probation or have great fluctuations in expenses, it might be better to hold off on your loan application.
Don’t create or incur any new debt while you apply for a loan.
Hold off to buy a new car, go on a holiday or make any other large purchases. Anything that adds to your debt, even if it is credit card debt, can increase your debt to income ratio. This could decrease your chances of getting a loan because it could be seen as a poor reflection on you as a borrower. If you need something desperately, talk to your loan provider. They’ll tell you what are acceptable purchases while you apply for your loan.
Have you asked yourself these questions? You should have a clearer idea of what type of loan you need. As well as how much you need and for how long! If you haven’t used the loan calculator on Loan Peeper to get an estimate of your total loan amount, you should do that right away! This estimate will give you a better idea of what to expect. If there are extra fees, you’ll be able to ask about them. It’s important to clarify all your doubts with your loan provider before signing on the dotted line! A loan can be a great way to maintain or get back your financial stability. However, you’ve got to be informed and prepared first!