5 Ways to Improve Your Chances to Get Your Loan Approved
In the Philippines, it has always been a struggle to get a loan; it is because of the conservative approach that our banks implement. All banks in the country do thorough background checks and assessments especially when a borrower is requesting for a large loan. It seems that these banking institutions are too uptight to lend money. And no one can ever question that because banks are there to do business. Although this is the case, there are ways to improve your chances. Below are the means of getting that extra leverage to get approved.
Have a Stable Source of Income
Get this: Banks are more likely to approve a rank-and-file employee with a small but stable income than a casual or contractual employee with higher salary. This is because income stability is a very important factor for bankers and is seen as the primary component of your ability to pay. It is even regarded as a deal-breaker for the borrowers.
Establish Banking Relationship
Having credit card transactions, savings account transactions, or other bank related transactions with the same bank that you’re applying for a personal loan improves your financial credibility. Hence, it improves your chances of getting your loan approved. On the other hand, this is still true even with having transactions with other banks. It may seem odd but banks honor financial credibility of a borrower from its competitors. But all the more banks honor loyalty.
Provide Detailed Information in Loan Application
If you’re applying for a loan to set up a business, it is the most crucial thing to provide as much information as possible. Bankers need to check everything related to your desired business. Of course the banker would weigh out the chances of your business becoming successful which makes or breaks your business. So it is very important to provide detailed information for you to really convince the bank that your business is going to work and consequently become very profitable. A business model is preferred.
Reassure the Banker with a Contingency Plan
Many of you may not be aware but banks are likely to lend money to borrowers with a contingency plan because it reduces the risk of nonpayment. One very good example of a contingency plan is having a guarantor. The guarantor is someone who is liable to pay for the loan if the borrower cannot. So the bank would compel the guarantor to pay the debt even if he/she did not receive any benefit from the loan which of course if agreed upon by him/her whilst signing the Guarantee Agreement.
Repay Other Debts
Having other debts would make it harder for a bank to collect from you because the bank would need to compete with these other debts for your income. So it’s a no brainer that banks will turn down your loan application if you have a lot of unsettled liabilities(unless of course if you have a positive debt-to-income ratio). So you have to make sure your plate is clean from debts or to at least pay for the ones that you already can so that you can improve your chances.