A personal loan can be quite beneficial when used responsibly, but it can quickly turn into a nightmare if you’re not careful. If you’re applying for a personal loan, make sure you avoid these five things to increase your chances of being approved and to secure an attractive interest rate as well.
1) Bad Credit
If you’re applying for a personal loan and have bad credit, then there’s nothing to worry about. Lenders look at more than just your credit score when approving your loan; they also consider how much money you make and how long you’ve been working, as well as what type of credit card you own (for example, Visa or MasterCard) and even how often you apply for loans.
2) Cheating
Just because you’re trying to get approved for a personal loan doesn’t mean you should inflate your income or assets. This is an automatic red flag for lenders, and even if you do get approved, chances are it won’t be in your favor.
This may be tempting due to high interest rates that come with some loans, but remember that those rates are there because you’re considered more of a risk than someone who is truthful about their finances.
3) Fail To Pay Back
If you fail to pay back your loan, it will damage your credit score and make other lenders reluctant to approve future requests.
If you’re thinking about taking out a personal loan, think twice before applying if there’s any chance you might not be able to afford paying back. The consequences could be severe.
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4) Failing To Tell Everything
If you’re trying to get approved for a personal loan, there are certain pieces of information you cannot fail to share with your lender. No matter how embarrassing or unpleasant these bits of data may be, it’s best that you air out all dirty laundry before talking about specifics.
These 5 things that must be disclosed include: credit score (check), bank account details (check), employment history (check), income status (check) and other lenders / creditors accounts
5) No Collateral
The first thing you need to know is that banks don’t like lending to people who don’t have collateral. If you own your home, then it may be possible to secure a mortgage loan—and if not, then your car or other personal property might act as collateral.
Banks have different requirements and considerations when it comes to collateral, so check with yours before moving forward. Also, keep in mind that many mortgage loans are difficult to obtain without good credit.
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