Suppose you are in urgent need of money to fund home improvements, pay off a debt, or pay an immediate expense, you might be considering taking out a personal loan. To help you determine your chances of being approved for a loan, getting prequalified would be the best option. Moreover, prequalification by several lenders might also help you find the loan that best fits your current needs.
Why Should You Get Prequalified?
There are several advantages you can get from being prequalified. Just like applying for a traditional loan, the lender will evaluate your financial status for them to decide whether to approve your loan application or not. Furthermore, this is also similar to Opploans.
It is vital to note that undergoing a prequalification process does not give you a guarantee of getting your loan application approved. However, it can help you get to know whether you have a huge chance of getting approved or if you might still need to improve your chances.
Getting prequalified can also help you find the right loan for your current financial situation. Not only that, but it can also get you the best loan terms and interest rates. Moreover, if you should go around and get prequalified from several lenders, you can easily compare the choices for interest rates, estimated loan length, loan size, and fees.
How To Get Prequalified For A Personal Loan
Most of the time, getting prequalified is a quick process. In fact, some lenders would only require you to answer a few questions online. Furthermore, the steps in prequalifying for a personal loan usually vary from one lender to another. However, the common ways go like this:
You choose one or more lenders.
When it comes to getting prequalified, you can opt to apply online with a credit union, bank, or online lender website. You can also choose to apply over the phone or in-person with a credit union or local bank.
You furnish the lender with your basic personal information.
The basic information you will be required to present to the lender might include your name, income, address, the loan amount you desire, and employment details.
You wait for the lender to evaluate the information you provided.
Once you have given the information the lender required, they will thoroughly check it. They might also perform a soft credit inquiry before deciding if you can prequalify for a loan. Moreover, it is vital to note that some lenders might perform a hard inquiry instead of a soft inquiry. Hence, it would be best to check it first.
What To Do After You Get Prequalified
As mentioned before, getting prequalified does not mean your loan application is already approved. It just means you are one step closer to getting approved. Before giving their final approval, the lender might still want to verify all of the information you have provided first.
Lenders usually have their own process in evaluating your loan application. However, once you get prequalified, most of them will have provided you with vital information regarding the loan terms, monthly payments, interest rates, fees, and the like. With all of this information from several lenders, you can compare your choices and find the best loan that perfectly fits your needs.
It would be best to keep in mind that the interest rates and other terms provided for you during the prequalification process are only estimates. This means the numbers can still change once you present your formal loan application to them and after they assess your financial information even more. Furthermore, once you have already chosen a lender, you will be required to complete your formal loan application and provide additional documents to verify the information you have given during the prequalification process.
What Happens If You Don’t Prequalify For A Personal Loan?
If this is the case, it would be best to start improving your credit to boost your chances of prequalifying for a personal loan. It will help if you review your credit scores and credit reports. Not only that, but it will also help if you dispute some errors (if there are any) with the credit bureaus.
You can also opt to increase your odds of getting prequalified by narrowing your search to lenders who cater to borrowers with the same credit status you have. Some lenders might work with excellent or good credit. On the other hand, others might specialize in fair or bad credit.
Considering other financing options can also be a possibility. If you want to take out a personal loan for home improvements, you can try out a line of credit or a home equity loan. You can also consider if you have a friend or family member who is willing to become a co-signer or will lend you some money. Lastly, you can also choose to try your luck with a lender that might be more willing to work with the qualification gaps you currently possess.
To Sum It Up
Prequalification does not guarantee you loan application approval. However, it can help you understand your chances of applying for a personal loan. Also, prequalification with several lenders can help a lot in finding the best loan deals there are for you.