Preparing to make your first loan application can be a little daunting. So we at SJ Financial Services have put together the top tips you should follow to relieve the stress and increase the likelihood of your first loan application being successful.
LIMIT YOUR LOAN ENQUIRIES
Limit your applications and let us do the work for you. By letting us take your loan application, we can reduce the number of times you apply for credit. Every time you apply to a lender, it is recorded on your credit file and a large number of applications over a short time can reduce your credit rating. This “footprint” on your credit file is seen by each lender, when you apply for a loan and can give the impression of instability, making you appear as a credit risk and less likely to get an approval.
KNOW HOW MUCH YOU CAN AFFORD TO SPEND
This gets back to financial basics and the importance of doing a budget. It is more critical than ever that you are aware of how much you can afford to repay on a weekly or monthly basis. It’s one of the consequences of the inquiry into banking and insurance that lenders will look at your expenses with close scrutiny. They will insure that you are in a position to make the repayments, without causing financial hardship. It’s in your best interest to know in advance how much you can afford to repay, in order to avoid your application being declined.
HAVE THREE BANK ACCOUNTS TO MANAGE YOUR MONEY BETTER
It is to your advantage to be able to monitor your expenses. Lenders will scrutinise your bank statements, looking for irregularities. Consider having three accounts, one to receive your salary or wages, one for your direct debits to pay regular commitments and one for saving. Lenders look favourably on your ability to be able to save and not spend everything you earn.
SHOW GOOD SAVINGS HISTORY
Another way to demonstrate you’re financially responsible is to contribute regularly to your savings. If you show you can save a set amount of money every week or month, you’re also demonstrating that you are likely to be able to manage regular loan repayments. Particularly if it’s your first big loan, you’ll probably need to show that you don’t spend everything you earn.
HAVE YOUR PAPERWORK READY TO GO
ave your paperwork ready in order to make the process easier when you’re applying for a loan. A financial institution will generally want you to provide:
- Proof of income such as a payslip or tax return
- Proof of your current ongoing expenses such as rent or loans
- Monthly living expenses
- Personal identification such as a passport or driver’s license
- 90 days bank statements
BE HONEST IN YOUR APPLICATION
A large part of the eligibility criteria relies on the honesty of applicants. Being dishonest or providing misinformation could damage a person’s chances of being successful when it comes to the credit checking stage.
It’s always strongly recommended that information given is accurate throughout the application process. If you are honest but the loan is unsuccessful, your financial situation can be sorted with a view of applying again in the future. It will also help you take the steps you need in order to be seen as a responsible borrower.
If you're still a little nervous about completing your first loan application, get in touch with the friendly team at SJ Financial Services - we'll be pleased to lend a hand.