Updated: Jul 5, 2019
Sometimes if you want to make a big purchase of designer jewelry or even if you want to buy some new clothes but you don’t have your paycheck yet, you might need to get a loan. Finding a loan offer won't be too tough. Lots of lenders want to approve your request. They intend to make a significant return thanks to excessive interest and fees. You don't want those types of loans. Instead, focus your attention on locating reasonable loan deals that provide funds at fair costs. And, the process for doing so isn't incredibly difficult. Here are some things to think about when looking for a decent loan.
Get a Cosigner
Although you have every intention of paying back a loan, your past credit history could undermine approvals, according to Green Path. Poor marks remain on a credit history for seven years. Bankruptcies last 10. Such things haunt you when seeking out a quality loan offer. So, why do things by yourself? Asking a trusted friend or family member to co-sign the loan helps. With a co-signer, you and the other party become equal parties. His or her positive credit history may override problems on yours. Choose a co-signer wisely, and a fast and agreeable loan offer could come through.
Know Qualitative Factors
Understanding qualitative factors and their related unique circumstances could improve your chances of accessing better loan deals. Current Expected Credit Losses (CECL) paint a picture of qualitative and environmental factors that determine loan approvals. A lender may look at the applicant's income, credit history, and overall monthly expenses to make a decision.
The lender might even look inward before stamping an approval. For example, the lender may look at its own levels of debt and fiscal solvency. Approving new loans to anyone could be risky. According to Visible Equity, even in the new CECL model, qualitative and environmental factors still apply. Don't assume any changes to the model mean a reduction in Q&E. Avoid passivity in the loan search. Find out what the current Q&E landscape is before contacting institutions.
Look into Pre-Approvals
According to Auto Simple, if you receive a solicitation noting you are "pre-approved for a loan," the lender wants your business. The institution probably has a good deal on interest rates as well. Try to find as many pre-approval offers as possible to build a pool of decent lending sources. A caveat does exist here. A pre-approval doesn't mean you will be approved during the final application. A closer look at something such as yearly income could lead to a denial. Regardless, a pre-approval does show you met some basic qualifications, and you won't be applying blindly.
Don't become frustrated when your loan search doesn't seem to go well. Options do exist for would-be borrowers. Patience and diligent searching may help the cause.