If you meet a lender’s minimum qualifications and want to see estimated rates and terms, you can pre-qualify for borrowing money.
By: Hitesh Khan/
When it comes to borrowing money, consumers have a variety of choices, ranging from credit cards to home equity loans. Personal loans are used for various purposes, such as meeting family emergencies, purchasing home furnishings or consolidating other debts.
These loans are generally short-term. Most personal loans range from $100 to $5,000 with the borrower paying equal installments at regular intervals over a determined number of weeks, months or years.
When deciding whether to obtain a personal loan, consider the benefits and responsibilities.
When you consider borrowing money know that a personal loan:
1. Obligates future income. You’ll be required to set aside a certain amount of future income for loan payments.
2. Requires discipline. Borrowing wisely means not borrowing more than you can handle. Don’t let the thrill of buying or having a sum of cash obligate you to more than you can afford.
3. Makes it possible to meet unexpected expenses. The ability to borrow and make affordable payments can be helpful if an emergency arises that requires extra money.
4. Allows you to obtain products and services now and pay for them later. A loan can provide an opportunity to purchase bigger-ticket items and use them right away.
What happens when you apply for personal loans?
Before being approved for borrowing money, you will be asked to complete a credit application that may include: your name; passport/NRIC number; date of birth; current and previous addresses and length of stay; current and previous employers and length of employment; occupation; sources of income; total gross monthly income; and financial information on existing credit accounts.
Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report.
Your credit history helps predict how creditworthy you are — how likely it is that you will repay a loan and make the payments when due. The creditor’s decision to loan you money is based upon what appears on your completed credit application and your credit report.
Before the lender approves your application for borrowing money, they may require you to provide a guarantor.
A guarantor or co-signer to personal loans is a third party in the loan contract. In the event of a default by the borrower the co-signer is legally obliged to repay the loan. So, if your credit scores are in the “fair” range, adding a guarantor with stronger credit and income can increase your chances of approval. But you should have an honest conversation with the prospective guarantor so they fully understand the risks before agreeing.
Find the right lender before getting personal loans approved
Most financial institutions and non-traditional lenders disclose their minimum requirements for lending. If you meet a lender’s minimum qualifications and want to see estimated rates and terms, you can pre-qualify for borrowing money. But pre-qualification is not the same as putting in an application for personal loans.
You may pre-qualify for a loan and yet your loan application may be rejected once you put in a formal application – and the more formal personal loan applications you put out, the more the impact is on your credit score.
Most lenders will usually have a maximum amount an applicant with a certain income level can apply for, so be mindful that requesting more money than you need to reach your financial goal can be seen as risky by lenders. Also, be mindful that a larger personal loan squeezes your budget, as higher loan payments impact your ability to meet other financial obligations, such as education loans or mortgage payments.
What’s equally important before submitting applications for borrowing money is for you to pay down your debts as well. Boosting your income and lowering your debt improves your debt-to-income ratio, which is the percentage of your monthly debt payments divided by monthly income. A lower debt-to-income ratio shows your lender that your current debt is under control and you can take on more.
There are several good reasons why you need to work with trusted loan specialists like those at iCompareLoan. Our Loan specialists are able to not only pre-qualify you with multiple lenders and compare rates and terms, they are also able to get you the best personal loans which has costs and payments that fit into your budget.
How to Secure a Personal Loan Quickly
Do you want best personal loans but not sure if you qualify? Don’t worry because iCompareLoan loan specialists can set you up on a path that can get you a loan in a quick and seamless manner.
We also can arrange the Best Home Loans in Singapore as our brokers have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home purchase needs.
Whether you are looking for a new home loan or to refinance, our mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the loan. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us.
If you want to speak to our Panel of Property agents or loan specialists.