Want to Apply for a Loan? Here’s What You’ll Need to Qualify

by on May 21, 2018

If everyone made enough money to handle their bills and afford whatever they wanted, life would be grand. Seeing as how this isn’t a reality when you need or want something, but don’t have the cash for it, applying for a loan is ideal. Yet, with so many different loans out there, how do you know which one you need? Or even better, what you’ll need to qualify? Getting educated prior to applying for a loan is recommended, and the below information is a great place to start.

Types of Loans

If you were to simply type “loans” into a search engine, you’d be routed to several different types. The kind of loan you should apply for will depend on several factors. However, the first factor depends on what you intend to use the loan for. Below are some of the most basic types of loans to consider:

Car loans – these would be used if you needed to finance a new or used car from a dealership.

Mortgage – if you’re in the market for a home, a mortgage would be ideal.

Student loans – the cost of higher education can be overwhelming. A student loan will cover the cost of anything college related.

Personal loans – if you’re in need of quick cash, personal installment loans [online] can be used to cover any expense you may have.

Business loans – business loans are for business owners who need to cover operational costs.

Car title loans – If you own a car outright and need a few dollars to tide you over until payday, you could apply for a car title loan.

What’s The Eligibility Criteria?

Now that you know the basic types of loans out there and the reasons you might need them, let’s take a closer look at what you’ll need to have and do in order to qualify for the loan of your choice. These eligibility requirements do not apply across the board and will significantly vary based on the lender you choose and type of loan you’re applying for.

Good Credit History – Lenders need to know that they can trust you with their money. So, they will use your credit history to make a determination on how trustworthy you are. If you’re looking to apply for a car loan, mortgagee, business loan, and some personal loans (like those from a bank), you’ll need to have a good credit history. Short-term loans like personal installment loans and car title loans do not often require a credit check.

Collateral – To lower their risks when lending you money, lenders will often ask for personal assets as collateral. Should you fail to repay the loan, your asset will be repossessed. This is typical for a mortgage, car loan, business loan, or secured personal loan.

Income Limits – Obviously, you’ll need to prove that you have a regular income that can be used to pay the loan back, so your income limits will matter. Larger loans will require you to have a higher income.

Checking or Savings Account – Most lenders aren’t going to give you cash in hand. Instead, they will deposit the funds into a checking or savings account. You will need to have a valid account that, in many instances, is not in negative standing. This essentially means that your checking or savings account has not had any insufficient funds or bounced check fees in the past few weeks.

Financial Status – Again, lenders need to make sure that giving you the loan will not be too much of a risk for them. Some may take your financial status into consideration. If you are currently filing bankruptcy, unemployed, have a large amount of outstanding debt, or don’t meet minimum income requirements this could impact your ability to borrow money.

Loans are beneficial in that they allow you the financial means to get things you want or need. Before applying for a loan, it is important to consider the type of loan you’re going to apply for and what you’ll need to qualify. You’ll also want to review various lenders to choose the best one and check your budget to ensure you can manage the funds responsibly. In doing all of this you’ll have the most positive borrowing experience possible.

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