Finding The Right Loans

Why You Should Get Preapproved for a Loan

19 March 2020

April George

When searching for a personal loan, one trick is to get preapproved for the loan, also known as a prequalification. By doing so, you'll be able to look at several personal loan offers that you'd be able to receive to determine which offer would be the best for you. Becoming preapproved for a loan isn't difficult if you know what personal lenders are looking for.

Take Advantage of Many Lending Options

There are more lenders available than in the past. While having a larger number of lenders is great for borrowers, many consumers are failing to take advantage of the pre-qualification process. While you may not be approved, the process will help you determine whether you're a strong or weak loan applicant.

When seeking preapproval, beware that the approval is contingent on your situation remaining the same. For instance, if your credit score declines, you may not receive the same loan offer or you may be denied altogether.

Provide Your Information

To seek prequalification, you'll need to provide important information such as your social security number, income, debt, employer, contact information, address, previous addresses, date of birth, and even your college name and major. Oftentimes, this can be done online, and you'll receive an immediate answer. Or, you may be able to seek preapproval by calling. 

Understand How the Lender Defines Certain Terms

There are no specific regulations for what is considered a prequalification. Therefore, you'll want to speak with the lender to understand what it means. For instance, some lenders may preapprove you as long as you present additional information such as a paycheck stub. Other lenders may want a co-signer.

Make the Process More Efficient

Traditionally, you would walk into a bank and ask for a personal loan. However, if you believe that you could receive a better APR or a shorter loan, you may want to seek preapproval for several personal loan lenders. 

A lender is much more willing to work with you if you are preapproved for a loan. Many borrowers will try to secure loans that they would not qualify for due to having an insufficient income or a terrible credit score. By being prequalified, the lender will know that he or she can make the best use of your time together.

The lender may call you and make arrangements to complete the paperwork necessary to start the loan while already having all the information necessary to expedite the process. Overall, this approach is the most efficient and fruitful.

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