If you’re in the market for finding a loan that meets your exact requirements, you may find that the options, depending on what you want, can be limited. Whether it’s because a lender needs you to have a specific credit score, be a homeowner or have a minimum income, it can be more complicated than it seems. Due to the various hoops a lender can get you to jump through to get the financial help you crave, many people may become disheartened or frustrated with the process.
When trying to get the exact loan you want, there are a number of ways to improve your chances of doing so. Although nothing is guaranteed, if you do everything possible that will elevate your application, there is every chance you’ll be successful when applying. You want to make yourself as desirable as possible to lenders so they will find it difficult to turn you down. But how can you achieve this? Well, we’re happy to give you some direction with our guide to the top 6 ways you can get the loan you want easily.
1. Compare Lenders
When you know what you want, you need to check all the available ways to get it. It’s important to see all the available options before committing to anyone lending product. You can compare online loans very easily with the help of websites such as personalloansnow.co.uk, highlighting the options that are best for you against your exact loan requirements, making the process of applying much quicker and easier. By using a comparison website, you can take the manual process away when finding suitable lenders, replacing it instead with a few clicks or swipes to have a full overview of what’s available. Comparing lenders in this way will save you time and effort, rather than looking through each lender manually to check the available deals.
Comparing loan lenders will also allow you to see the different types of loan available to you. Depending on what type of loan you need, there are many different products out there that will be suitable. From secured loans to guarantor loans and personal loans, you’ll need to carefully think about what the loan will be used for and how much you want to pay each month. If you’re looking to buy a car, for example, you may want to look at a personal loan that’s unsecured and won’t mean you have to put the vehicle up as collateral if you can’t maintain the loan. If you need to purchase equipment, click here to get the financing you need.
Comparing your options will also show you the products you will want to avoid. You may find options that are easy to get but come with heavy interest charges and bigger penalties if you get into financial difficulty. With 1 in 5 adults not knowing the difference between a personal loan and a payday loan, it’s important to understand the different loans available to you. The reason being, picking the wrong product can cost you a lot more to pay back overall.
2. Check Your Credit Score & Report
Just as important as checking your available options is checking your credit score. Doing so will give you a quick indication of how likely you’ll be seen as a suitable applicant. You can do this for free by contacting one of the 3 main credit reference agencies (Experian, Equifax or TransUnion) or by using apps/websites such as ClearScore or CheckMyFile. By checking your score, if you see you have a good or excellent rating, then you’ve got a great chance of being approved. However, if your current score is less than you were expecting, fair to very poor, you’ll want to find out why that is. According to finance.co.uk, if you have a poor credit score you can get loans that require no guarantor. Having a poor credit score doesn’t mean you can get a loan, but it will mean you’ll find it very difficult to get the terms you want, especially without paying higher amounts of interest.
Most credit reference agencies will allow you to see your full credit report for free for a trial period – usually no longer than 30 days. After this, it will cost you a monthly fee to see this information. You don’t have to check your report with all 3 main credit agencies as they should all show the same information. The reason checking your credit report will be extremely useful to you is because it will detail the positive and negative aspects affecting your score. This means you can pinpoint the areas that are causing the issue.
To stand the best chance of getting the loan you want, you’ll need to review this information and start to make changes where needed. For example, if you have a credit card that you keep making late payments on, this will impact your credit score. By addressing the problem and making payments on time, this will improve your score. You’ll find many different aspects that will affect your overall score, so check the negative factors and start to put them right.
3. Don’t Use All Your Available Credit
If you have an existing overdraft and/or a credit card, are they currently maxed out? If you answered yes, then you will be seriously impacting your chances of getting the loan you want. By being close to or maxing out the credit limits on a credit card or overdraft, it will reflect on your credit report that you rely on these amounts. This will not put confidence in the lender that you can comfortably afford further borrowing if you already have products with low available credit. What you need to do is work on reducing the amount that is currently in your overdraft or credit card, aiming to get to 50% credit availability on them. For example, if you have a £1000 overdraft limit, you need to get the balance down below £500 to show a reasonable amount of affordability.
If your credit file can show to a lender you have your finances under control, it will help raise your score and provide lender trust that you can manage further borrowing. A credit file showing a high debt-to-available-credit ratio will cause concern for a lender, so work on reducing this to elevate your score.
4. Don’t Apply With Many Lenders at Once
A definite top tip when you find the loan offers you like the look of is too not apply for all of them in a short space of time. Of course, if you get accepted for the first loan you go for, great, but if you are declined after that first application, hold off from applying for another too quickly. The reason why is because a hard search will be conducted on your credit file each time you apply for a loan product and will be recorded. The more hard searches you have on your file, the more this has an effect on not just your score, but other lender’s judgement. If you apply for a loan and the lender sees you have been declined 3 times already in the last week, this does not have a positive impression. It could show that you are in a desperate situation for money and will influence a lender’s decision. Your best strategy when you have been declined is to space out the applications you’re making. As much as you want to quickly get a loan, applying for many things too quickly will not end positively for your credit rating. Then, you’ll have an even tougher time getting the loan you want.
5. Work at Bringing Your Existing Debts Down
Linked nicely to keeping your available credit under control, if you have existing debts on loans, credit cards, overdrafts etc. you should review how much you actually have outstanding to pay. Your credit file will show a total of the debt you currently have on personal lending. This means a lender will be able to see just how much you owe overall and will be considered when assessing your application. Of course, if you have a lot of different lending products you are currently paying off, a lender will have cause for concern. Even if you are currently maintaining all your debts and have a good credit score, if you have a high amount of lending already, a creditor may reconsider adding to your financial commitments.
If you can demonstrate your working to bring these balances down, this will paint you in a positive light. If you’re currently or are looking to make overpayments, a lender will be able to see this on your credit file. If you have a credit card, for example, if a lender can see you only ever make your minimum repayment, they may see this as a sign of struggling. The key takeaway is, if you can afford to pay more off each month, then do so. A lender will consider this a good habit when assessing you.
6. Budget & Check Your Affordability
Last, but no means least, you should fully assess what you can actually afford. It’s all very well wanting to borrow more money, however, it’s another to be able to afford to maintain the loan. Say you want to borrow £20,000 to cover the costs for a new car; great, but have you considered how much this will cost you each month (including interest), depending on how long you want to pay it off for (5 years? 10 years?). The idea can be different from the reality, as you will need to consider if a lender can offer you the terms too. You may find a lender that is happy to lend you the full amount, but only if you pay it back a year quicker than you originally had planned. The risk here is, you may agree to the adjusted terms the lender gives you without checking if the new monthly repayment is still affordable for you.
It’s highly recommended you check through and compare your current monthly income against your monthly outgoings. This needs to contain all of your current commitments that need to be paid each month. It may take time to work it all out thoroughly, but it is time well spent in the long term. If you haven’t ever done this or not for a long time, you may have not realised just how much your outgoings in total are. Small purchases here and there can mount up over the course of a few weeks; you may be surprised by what you find. Once you have determined your disposable income (after all the essential payments have been made), you can work out how much of this you’re willing to spend on further lending. Ideally, you do not want to be using all of these funds to do so, as it will mean all of your income is accounted for. You can then match this up with suitable products to find the ideal loan you can afford.
Spending time on working out your budget will go a long way to getting the loan you want, as you’ll be able to see if you can really afford it. Hopefully, you’ll find you have a healthy disposable income that means you can afford to pay for many different terms a lender can give you. Being fully prepared is the best way to go into applying for a loan. Combine this with shopping around, comparing the offers available to you and applying for products your eligible for, will improve your chances of getting the loan you want.