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How to Make It Easy for a Lender to Approve a Personal Loan

[Jun 30, 2009.]


Getting an unsecured personal loan can be easy even for borrowers with imperfect credit. However, getting an unsecured personal loan will never be easy for unprepared borrowers with imperfect credit.

To maximize chances of keeping the approval process smooth and simple, take steps to make it easy for a lender to approve this loan, no matter the credit issues and no matter the lack of collateral.

Here are a few tips on what "easy" means to a personal loan provider:

Have a Job and Keep It

A personal loan, since it is designed to be a short-term, smallish loan, relies very heavily on a borrower's income. But not necessarily, as with a mortgage, the amount of income; rather, its consistency.

In other words, the number one best way for a borrower with imperfect credit to easily qualify for an unsecured personal loan is have a job and keep it--and make sure the lender sees that. Make sure the lender understands that paychecks come on Friday, every Friday, Friday after Friday.

Establishing current and verifiable employment, as well as employment history, is priority number one for the personal loan applicant who wants to make approval a slam dunk.

Now There Is the Little Matter of the Credit Imperfection(s)

For the borrower with imperfect credit, before applying for a personal loan is the time to get out in front of lender concerns about an imperfect credit history. Borrowers seeking to keep things easy should purchase a yellow highlighter and a copy of their credit report, and then highlight problem areas.

Once the problems are identified, develop a short explanation (not excuse, explanation) as to why this problem occurred. Throw in a "lesson learned" to show that the problem won't occur again.

Connect the Personal Loan to the Job to the Bank Account

As noted, an unsecured personal loan is often a "your job is your credit" proposition. In order to make that equation clear for the lender, and possibly get a lower interest rate on a personal loan, consider connecting the loan directly to the job, via the bank account.

Meaning: have that Friday paycheck direct deposited to a bank account (the same bank account, every time) and then have the personal loan repayment direct debited on Monday. Some personal lenders will demand this direct connection.

Borrowers who want to make the approval process as easy as possible should think about getting ahead of that request and making the offer themselves.


About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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