What to Think About Before You Apply
Unfortunately, many borrowers in today's fast pace environment start applying to lenders without thinking about the consequences. There are several things to consider when searching for a loan, and applying to a lender. Even if you have pristine credit, if you make an error on your application, or apply to the wrong loan provider, you may be denied.
To help you avoid some common mistakes, we've compiled a list of some things you need to consider when applying for a loan of any type, whether that be an auto loan, mortgage, small business loan, or personal loan . After reading this page, should you have any further questions, don't hesitate to contact us at 1-888-952-7280. Our office hours are Monday - Friday 9:00 am to 5:00 pm Eastern Standard Time. We'd be happy to provide you with as much or as little information as you need.
Your Credit Situation?
Every lender is different and has different underwriting guidelines. Because of this, it is critical you only apply to those lenders that work with people in your credit situation.
Applying to the wrong lender may result in a decline or unfavorable terms. Each time you apply to a lender a soft or hard inquiry may be placed on your credit report. Hard credit inquiries may lower your credit score. If you are unsure if the lender you're applying to accepts individuals in your credit situation, don't be afraid to ask. While some lenders may not provide you their exact underwriting guidelines, they may be able to give you an idea of what's required.
Double-Check Your Application
When filling out a loan application, it's important you do so accurately. Every application is different and may require you to enter information in a slightly different way. For example, one lender may ask for your monthly income, while another may request your annual or yearly income. Before you submit an application, make sure you double check everything to ensure it's correct. Entering inaccurate information may cause a lender to decline your application.
Be Ready for Questions
Not all, but many lenders will want to speak with you directly before making a decision on your application. A lender may also require you to provide documentation to verify your identity, employment history, income and place of residence. Before speaking with a lender, you should prepare.
Below are a few common questions lenders may ask:
How will you use the funds?
How long you have been with your current employer?
What is your verifiable income?
Before speaking with a lender, you'll want to make sure you can answer the above questions. When talking to a lender, keep in mind, the lender will be evaluating your ability to pay back the loan at a given set of terms. If you have less than perfect credit, you'll need to have a clear explanation of the negative items on your credit report. If you have documentation to support your explanation, have it ready. Also, if you are not responsible for a debt that is listed on your credit report, such as in the case of a divorce, make sure you have documented proof.
Read Everything, Including Fine Print
Once you have been approved by a lender, read the paperwork before signing. The worst thing you can do is accept a loan without understanding the repayment terms. Make sure you understand the total cost of the loan, APR and all other repayment terms.
Below are a few things you must know before accepting a loan:
Your payment. Is it fixed or can it change? When is it due?
Your interest rate. Is it fixed or adjustable? What is the loan APR?
Are there any fees or additional cost associated with the loan?
What is the total amount you're borrowing? What is the total amount you're paying back (principal, interest, plus any fees)?
What happens if you cannot pay-back the loan?
It's very important you do not take out a loan you cannot payback. Make sure you don’t stretch your finances too thin. If you are uncertain how much loan you can afford, you can use our free loan payment calculator as a general guide.
Is The Lender Licensed?
Before you accept a loan from a lender, you may want to ensure they are licensed to do business in your State. If you found the lender online, this is even more important. Most States have a place where you can look-up a lender to see if they hold a valid license. You may also ask the lender for this information directly.
Know Your Options
If you have any questions, don’t hesitate to contact us. Our representatives are standing by Monday - Friday 9:00 am to 5:00 pm Eastern Standard Time.