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Will you be able to increase your loan once you got approved and the paperwork is done? Short answer is no. That is why it’s very important to do your research and find out what and how much you need before even applying. Because in order for you and the lender to increase the amount, your current loan needs to be canceled and you’d need to reapply. But you can, however, increase the maximum amount of money you can borrow.
Things to Consider Before Taking a Loan
These are the things that you can do to increase your loan amount.
Raise your credit score – By improving your credit score, the more your options widen, because your FICO or credit score directly influences the interest rate that you’ll receive. Even by having a percent less would mean that you can borrow hundreds, and even thousands more.
Establish compensating factors that’ll allow for a higher debt-to-income ratio – Along with your credit score, your debt-to-income ratio will determine how much you are qualified to borrow. And when paired with a strong compensating factor, your lender may be able to offer you an even higher amount.
Compensating Factors are as follows.
Exceptional credit score
Huge savings or cash reserve
Employed for 5 years and above.
Large down payment
Get a 40 year fixed term and an adjustable-rate – This method will give you the lowest interests, and longer terms allowing in more wiggle room, thus increasing the amount of loan you can get
Look for other ways to generate more income – Adding another source of income will greatly reduce your debt-to-income ratio. There are many sources that may qualify, but it’s better to talk to your lender about this.
Shop Multiple Lenders – You don’t have to limit yourself to only one lender. There are other options out there that are just waiting to be explored. Lenders who offer lower rates, longer terms, and higher amount that you can borrow. It’s best to get quotes from at least 4-5 lenders so you can compare and choose the best one for yo.
Do you badly need to loan? Are you wondering if you can increase your loan amount?
Things To Consider About The Amount You Borrow
If you applied for a personal loan which has a general purpose. Then you certainly cannot increase the amount of your loan because personal loans usually have fixed amount, fixed interest rate, and fixed repayment periods. You jut can’t apply for a certain amount and then apply for a loan again without repaying your first loan. What you have to do is finish repaying your loan and then re-apply if you want to. Another thing is, applying for a higher amount of loan may cause you problems in the end. Trust the lenders because they will only lend you the amount that will match your budget.
How Interest Rates Work
The interest rates are usually fixed because this is based on your credit score. So if you have a good credit score then lenders may offer you a lower interest rate and this is an advantage for you because you will pay less as a reward for having a good credit score.
Now that you have an idea that it will be quite impossible to increase your loan amount then perhaps you’re thinking to apply for another loan because your first loan doesn’t suffice your needs but take note that having an open loan might affect your credit card application and loan applications. And if you want to finish repaying your loan early, the lender may charge you for a prepayment penalty. So if you think that your loan amount is not enough then maybe you can ask a family or friend to be your guarantor on a loan but before anything else, make sure that you will still have enough income if you less all your debts and expenses and be responsible to repay your loan because it will surely affect your credit score.
Remember to always maintain having a good credit history so when the time comes that you’ll need money then you can easily apply for a loan.