Can you predict the next minute of your life? What is the probability of you going on a vacation next month? Are you certain that you will get that job you applied for? The answer is undoubtedly, a big NO!
We live in a world full of uncertainty and improbabilities. Where we cannot even know what will we wear tomorrow, how can we know if our loan application would be approved? Agreed that there are lenders out there advertising 100% guaranteed loans, but it is really important to know that they do not exist.
It is very much understandable that it is a tedious process to go to a bank every time you need funds. For small amounts like a few hundred pounds, you would not want to take all that pain, and banks also might not offer such small loans. This leads you to visit an online private lender who deals directly with your loan application and provides approval without getting into any long documentation.
And when these lenders offer a guaranteed approval even before you have applied for a loan, you are bent towards opting for that lender right away. But doesn’t it look suspicious to you in anyway?
No borrowing source can ascertain the approval of your loan beforehand. Your credentials may be good enough for an approval to come through, but the chances of that are at maximum 97%. Anyone offering you a guaranteed loan is not being completely honest to you. The implication is to have a guarantor back your loan application, for times when you are unable to repay the loan yourself.
No one can approve your loan without doing prior credit checks and analysing your credit affordability. They have to at least make sure that you meet the basic eligibility criteria of age and citizenship. Therefore, telling you that you will get the loan amount even before knowing your age is misleading.
Now when it has been ascertained that your loan application can go either way, let us discuss a few reasons that may trigger or hinder the approval of your loan.
Your application may be approved if…
- You have a guarantor to sign your loan application. The term ‘guaranteed loans’ is more bent towards the term guarantor. A guarantor takes responsibility to pay your loan if you are unable to. The lender then knows that his money would return either through you, or the guarantor. You can somewhat expect a guaranteed approval if you have a guarantor to support your application.
- You have an impressive or at least good credit history. This reflects that you are responsible in your borrowings and you take the repayments very seriously. The reflection of your borrowing behaviour gives the lender a reason to trust you with his money. A good credit score is already a winning stroke in your application.
- You have a stable salary since some time now. Regular inflow of money in your bank account shows the lender that you will be able to afford the repayments, and the loan would not be a burden on your finances. The balanced chart of your incomings and expenditures expresses how much more you can accommodate out of your regular finances.
- You at least have some regular source of income. It can be income from some benefit that you are entitled to receive, child or spousal support, rent from a property or from working part-time. As long as it is visible to the lender that you have been financially sound over the past months and earning a decent amount for you to afford the loan, there would be merit to your loan application.
- You own a property like a house etc. Owning a property like a house or any premise adds an added layer of security to you as a borrower. A permanent address in your name reduces your flight risk and also induces confidence in the lender that you will be able to make money to repay his debt.
Your application may be rejected if…
- You make even a small spelling mistake in your application. The whole processing of your application is done online, and is mostly computerised. Data inconsistency is not handled well, and is taken as an attempt to have lied on the application form. Your form must adhere exactly to the real facts and there should be no human error from your side. Your form is the first reflection of your reliability as a borrower.
- The lender is not satisfied with your financial condition. Irregular and varying income over the past months tends to generate doubts in the mind of the lender if you would be able to repay the loan. You are a highly risky customer if you have been barely managing your finances. Your savings are what help you through this.
- You have a CCJ or bankruptcy charge against you. Most lenders avoid giving loan to people who have a prior history of defaulting the loan or have run out of money lately. No one likes a bad investment, and your past record might hurt you here. Some lenders however do offer specially designed CCJ loans.
Though no one can claim that your loan approval to definitely come through, there are factors that greatly enhance your chances of a guaranteed approval. Having a guarantor is the biggest boost to your loan application.