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If you have received an email from your bank telling you of the good news that you have been pre-approved for a personal loan, do not rejoice yet. While it does seem very promising, a loan preapproval is not really any assurance that if you will send in your application, you can get a definite yes.
A loan that has been pre-approved means that the lender has agreed to extend you a loan. However, this is still going to be subject to specific criteria that they have set. Usually, these are offers that banks extend so they can encourage their customers to take out a loan with maximum convenience and minus the usual tedious documentation.
Why were you pre-approved?
Banks will offer a loan preapproval when they find that customers have met certain parameters and criteria. For instance, they may have met the required current balance, income, saving history, and repayment history.
Being offered a preapproval is quite a good thing especially if you are interested in getting a loan because it offers faster processing and the whole application is significantly simpler. You can expect more competitive interest rates as well and you get the convenience of minimum, even zero paperwork.
Things to consider
It is important to understand that a preapproval does not always lead to funding. Lenders offer this as an invitation to qualified customers to encourage them to apply, most of the time, these are only offered within a certain period and customers should apply within that specific time in order to take full advantage of the special offers attached to the preapproval.
However, a borrower still has to meet other criteria that the lender has set before he can receive the actual funds. However, if you do pass the assessment to fully qualify, know that you are not obliged to accept the offer. Remember that when taking out a loan, only do so if you really require it to avoid getting into unnecessary debt.
Even when your credit is bad, there are still ways to get a loan. Whilst it may be a bit difficult and your options may not be as plenty, it should not be reason enough for you to give up on the idea of ever getting approved for one. So, if you are in need of some extra cash but your credit is bad, here are some things that you can do to find a lender who would be happy to assist you.
How To Qualify For A Loan
Get a guarantor
One of the easiest ways that you can qualify for a loan despite a low credit score is by getting a guarantor. This person must have a good credit score and a good stable income since he will be taking on the responsibility of paying the debt off if you are unable to make it. A guarantor can be a good choice if getting approved for credit seems a little too difficult for you.
Secured loans are also ideal for people with bad credit. Lenders will hardly look at your credit score when you offer security since they will already have something they can hold on to in the event that you won’t make your payments. It is rather risky on your part though since non-payment would mean losing the collateral. But if you’re in dire need of cash, this is an option worth exploring.
Get a payday loan
Payday lenders are known for catering to borrowers that most lenders are likely to turn down. They tend to look for more than just a customer’s credit score. Instead, they focus on their ability to pay back the loan which means looking into their present employment circumstances. If you have a regular job or receives a steady income every month, payday lenders are likely to see you as credit worthy enough. Just know though that they do charge very high interest for these types of loans.
If you can, it is always best to fix your credit score first before you start taking out loans. More opportunities will open up for you along with better loan offers when you can show lenders a better, more improved credit rating.