The good news is that there are ways of improving the chances of securing loan approval. All that is needed is some careful preparation, and taking a look outside the box. For example, looking to options amongst the range of online lenders can mean getting better terms.
There is no shortage of loan options to choose from, but finding the right one can be tricky. And whether seeking large or small personal loan, there are some areas that can be considered in advance to smooth the way to approval.
Collateral or Cosigner?
Security is always a great help to loan applications. When seeking a $5,000 personal loan with bad credit, for example, the risk of defaulting is quite strong. But by providing some form of security the degree of risk is drastically reduced, if not remove completely.
For most, security means collateral, where an item of worth is provided that matches the value of the sum to be borrowed. It provides a source of compensation for the lender in the event that the borrower defaults on the loan. So, securing loan approval is much easier with collateral.
But a cosigner is much more popular, especially when the borrower is unable to find anything to match the value of the loan. A guarantor basically guarantees the monthly repayments will be made so, when getting a personal loan, it is of more value to the lender. After all, they want to continue receiving payments, first and foremost.
Accessing Cash Fast
Most of the time, when we are in need of a loan, we are in need of the funds pretty much immediately. Thankfully, there are fast cash loans available, known as payday loans. There are compromises to make however, with these loans far from being cheap, and when a $5,000 personal loan with bad credit is needed there may be a problem with the sum.
Granted on the back of an upcoming paycheck, these loans come with no credit checks, so approval is very likely. But lenders have strict limits of $1,500, so that securing loan approval on a sum like $5,000, is going to be tricky. It may be necessary to take out 3 consecutive loans to make up the amount.
Also, the interest charged on these loans is very high, in some cases as much as 30%, while the repayment term is very short too, ranging between 14 days and 30 days. It may be possible to negotiate one personal loan of $5,000 and repay over 180 days, but this depends on the lender.
When it comes to loan applications, some people overlook the effect that seeking a little too much can have on the overall application process. Lenders want to know that applicants are mature so it is always better to stay realistic.
It is best to seek a $5,000 personal loan with bad credit if that is what is likely to be approved; increasing the sum to $10,000 is not necessary. Remember that convincing lenders their investment is safe is the only way to securing loan approval.
So, before sitting down to put together the application, take time to carefully calculate what is affordable. It is much better to seek a small personal loan and get it, than seek a large one and not.