Personal loans with prequalified process may be an option if you have a lot of debt to pay, home repairs, or a sudden expense.
You’re not the only one. TransUnion reported that between 2017 and 2018, the balance of personal loans rose by $120 billion, an increase of $18 billion. This can be attributed in part to the increased number of individual loan lenders.
Consumers benefit from a broader range of lenders. This means that there are more potential lenders to compete for their business. Many people don’t take advantage of the prequalification process, which allows them to compare multiple lenders.
A U.S. News Survey found that 52% of respondents don’t use prequalification (also known as preapproval) to compare lenders. Only 21% of respondents compared rates from more than three lenders.
Here are some tips to help you get prequalified for a personal loan.
- Why do you want to be prequalified?
- What is the difference between prequalified and preapproved?
- Prequalification for a personal Loan
- How do you get prequalified?
- What happens if you aren’t prequalified for a loan.
Why get prequalified personal loan?
Prequalification has a few benefits. Prequalification is similar to applying for a loan. The lender will evaluate your financial situation to determine if you can repay the loan.
Although prequalification does not guarantee loan approval, it will help you understand if you’re a strong applicant and how to improve your chances of getting approved.
Prequalification can help you get the right loan for you and save you money. You can compare loan terms, interest rates, and loan sizes by comparing pre qualifications from different lenders.
What is the difference between prequalified and preapproved? : Personal Loan
The complex answer is: Sometimes.
The Consumer Financial Protection Bureau says there is no difference between the terms in practice. However, meanings can vary from lender to lender.
It is good for a lender to explain what “prequalification” and “preapproval” mean. Find out more about the differences between prequalified or preapproved.
Prequalified for a personal Loan
Prequalification is usually quick and easy. Some lenders will only require that you answer a few online questions. While the exact steps for prequalifying a personal loan vary from lender to lender and lender to lender, here are some common ones.
- You choose one or more lenders. You can also apply over the phone or in person at a local credit union or bank.
- The lender will need basic information such as your name, address, and income. They may also ask for your employment details.
- Wait for the lender’s review of your information and to perform a soft credit inquiry. Some lenders may also use a complicated query to determine if you are eligible for a loan.
What do you need to do after you have been prequalified for a personal loan?
Don’t be too excited if you are prequalified for the loan you desire. Prequalification does not mean that you will be approved for a loan. It just means that you are one step closer to getting it. Before approving your final loan application, lenders will verify all information.
Each lender has its process. However, once you have been prequalified, most will give you a detailed overview of loan options. This includes the estimated amount of the loan that you are likely to be approved for.
Other information may include the monthly payment amount, loan length, interest rate, and any additional fees that the lender might charge.
This information can be compared to help you find the best deal.
Remember that the terms and interest rates you get from the lender are only estimates. They could change after you submit a formal loan application.
Once you have chosen a lender, you will complete the formal application and submit documentation to confirm the information provided during prequalification.
What happens if you don’t qualify for a loan?
It can be very frustrating to be denied prequalification for a loan, especially if you urgently need money. Do not let this happen to you. There are some things you can do if the lender refuses you.
Ask questions. Get answers from the lender about why your prequalification was denied. You may be able to make improvements that will increase your chances of getting a loan in the future.
Check your credit scores, reports, and credit history to see if you have been denied prequalification for a loan. Work to improve your credit.
Look into other financing options. A Home Equity Loan is an option. A balance transfer credit card is a good option if you are looking to consolidate your debt.
Discuss a cosigner. You can ask the lender about this to increase your chances of getting approved.
Prequalifying for a personal loan is well worth the effort. Prequalifying can help you compare loan terms and lenders to help you save money.
If a lender denies you, you can ask why and make some modifications to increase your chances of being prequalified.
My Name is Jay has and I have a passion for financial writing. I am the chief writer on this blog. I do my best to verify all the information but if there is anything amiss please let me know and I will do my best to correct it.