Get a preferable loan by knowing some of these industry tricks.
It’s well known that lenders consider your income, financial stability and business when assessing your eligibility for a personal loan. However, hidden behind these obvious considerations are a number of tricks of the trade that lenders know about... and you should too.
Here are four insider secrets to consider when comparing personal loans.
The interest rate of a personal loan is only the beginning and may not actually give you a full picture of what your loan costs. The fee and rate structure should also be considered alongside the rate percentage so that you can see how much the loan will actually cost all up.
Use a personal loan repayment calculator to see the total cost of your loan in real terms. Fill in the interest rate and the repayment period, then add in any fees. This can be a more accurate way of comparing multiple personal loans. If you’re considering refinancing or need to work out how to budget for different loans, a calculator can make it a lot easier.
A lender might find themselves in hot water if they were to deny a loan application based on age alone. This would be a clear case of age discrimination. However, your life stage can often a play a part in whether you are approved or not, and older or younger individuals may have a harder time finding a loan.
At the end of the day, lenders are primarily interested in the odds of being repaid in full. When a lender’s personal experience says that certain age groups can’t be trusted as readily as others, they will often approve and decline applications accordingly.
It can be difficult for an 18-year-old or a pensioner to find a personal loan. You can’t suddenly change your age, but you can compensate for your age by showing other indications of financial reliability.
Your credit score is available for free with finder.
What’s the difference between your credit score and credit history? They’re not quite the same thing and many lenders will consider both.
If you’re looking for a loan, you should probably know your credit score. This is a three-digit number that lenders use to get a snapshot of your financial situation.
For a more in depth look at your needs, financiers also consider your credit history. This is a detailed record of relevant transactions, including previous loan applications, bankruptcies, defaults and more. Repairing a damaged credit history can be more difficult than improving your credit score, but it is important.
Sometimes your application might be declined by a “robot” without a human ever setting eyes on it. This is often more prevalent with online lenders, because it’s one of the ways they can offer fast approval, sometimes within the hour.
Banks and lenders often use their own algorithms to check loan applications, automatically sorting the low-risk applications from the high-risk applications to pre-approve strong applicants. It can be a way of weeding out prospective borrowers who don’t meet the initial eligibility criteria. If you’re taking advantage of the fast approval and ease of use offered by online lenders, it’s often worth considering their automated eligibility requirements to avoid wasting time and money on applications that go nowhere.
Knowing all the industry tricks inside and out will be of limited help if you’re not choosing the loan product that’s right for you. To get the most out of your financing, start by comparing secured and unsecured loans, fixed and variable rates and other options to find a personal loan that’s right for you.