How to Up the Odds of Getting Cash Loan
There may come a time when you need to take out a loan. Whether it’s in a few years or months, boosting your loan approval chances now will benefit you later.
With rates on loans looking very competitive currently, you may want to apply for one if you have an impending hefty bill.
However, not everyone who applies for a loan will get these attractive rates—some will get approvals, and some won’t.
How to Up the Odds of Getting Cash Loan
Below are some tips to boost your chances of qualifying for a loan.
1. Polish Your Credit
Most lenders consider credit score when giving out loans—the higher the score, the greater the odds of getting approval.
- Look into your reports for mistakes. Errors like wrong credit limits, incorrect accounts, and closed accounts indicated as open can hurt your credit score. Therefore, check your credit report regularly to correct any errors.
- Ask for a credit limit increase. Contact your credit card provider and request a limit increase. Your loan approval chances increase with a rise in income. However, this strategy can go wrong and hurt your score temporarily if it needs a hard pull on your credit, so talk to the creditor in advance.
- Clear your debts in time. Be vigilant about settling your debts in time—make monthly payments towards the debt and, if possible, pay more than the minimum. This will improve your credit history and benefit the credit utilization rate.
2. Choose The Right Lender
Most online lenders provide the minimum requirements for annual income, credit score, and options like collateral and co-signers.
If you’re eligible and want to know the terms and estimated rates, you can pre-qualify for the loan. Prequalifying may trigger a soft credit pull with most lenders, but it doesn’t affect your credit score. If you’re looking for the best payday loan and cash advance rates, then check out Sun Cash.
You can pre-qualify with several lenders and compare the terms and rates. Select a loan option with payments that fit into your budget.
It’s advisable to opt for broker sites like Viva Payday Loans that connect you with lenders who offer cash loans wired in 1 hour. Viva Payday Loans, in particular, have favorable terms and loan amounts to meet your financial needs. Even bad credit borrowers can qualify for loans at Viva Payday.
3. Find Out Your Debt-To-Income Ratio
A high debt-to-income ratio indicates that your debts are more significant than your income— this is a sign of financial problems and inability to repay debts.
You may be ineligible for a loan regardless of your credit score if a large part of your income goes to debt repayments like auto loans, mortgage, and revolving credit card debt. Lenders need to know that they can afford repayments, and a high-debt-income ratio is a warning.
Generally, if more than 40% of your monthly income goes to debt payment, your odds of getting a loan approval reduces.
Ensure your income can adequately cover the cost of monthly payments to increase the chances of loan approval.
4. Don’t Request For More Money Than You Need
Asking for more money than you need reduces your chances of qualifying for the loan since lenders will view you as a risk.
Requesting for a big loan will jeopardize your other financial obligations as you won’t be able to repay other loans.
Lenders are more likely to approve a small loan than a big one. This is because small loans have a smaller risk and are easier to repay even with modest income.
Therefore, you should determine the exact amount of money you need to accomplish your goals and apply the minimum loan amount.
5. Provide Collateral Or A Co-signer
Make your loan application more appealing by adding a co-signer or providing collateral. The collateral should be something valuable that corresponds to the loan amount you wish to take out. For instance, you may place a car as collateral if you want to apply for a loan to replace a pricey appliance.
Most lenders are reluctant to give out loans to individuals with little or no credit history. However, if you apply for a loan with a co-signer with an excellent credit profile and a low debt ratio, you’ll increase your odds of qualifying for a loan.
The co-signer will be liable if you’re unable to repay your loan. Make sure the co-signer is someone you have a close relationship with, and they have a firm grasp of what they’re getting themselves into.
6. Choose A Short Repayment Term
Many lenders find long loan terms risky since the longer the duration, the more likely it is for something to occur that can hinder you from paying back your loan.
Additionally, a longer loan term means that the lender will take more time to get back their money.
The top benefit of having an extended loan term for a borrower is that the monthly payments will be small. However, long-term loans are hard to qualify for, and they end up being very expensive in the long run since you pay more interest.
Always go for loans with shorter terms as your chances of qualifying are more significant, and they’re less expensive in the long run.
Bottom Line
You can do many things to increase your chances of qualifying for a loan—follow the steps listed in this post to boost the chances of getting a “yes” from any lender of your choice in your next loan application.