If you are trying to get a loan with bad credit, you should make a point of getting pre-qualified. This will give you a better sense as to what your chances of approval are like. While it will not raise your chances of getting approved, it will provide you with some valuable information. You’ll be able to find out how much you can borrow and what kind of interest rate you can expect to get. This article will take you through the pre-qualification process and provide you with helpful information that can be of great use.
Prequalification vs. Approval
First you will need to understand the difference between prequalifying for a loan and getting approved. Prequalifying for a loan just means that you find out what your chances of approval are like. This means that you won’t actually get approved or turned down yet. It is essentially an indication of your credit worthiness. Just because you get prequalified for a loan doesn’t necessarily mean you will be approved. It is important to keep this distinction in mind when going forward.
Why Should I Prequalify for a Loan?
There are numerous reasons that you should at least consider getting prequalified for the loan you want. You will be able to find out what the terms of the loan will be like, so you know whether or not to keep shopping around. You will find out what your interest rate will be among other details. It will also give you a better idea as to what your chances are of being approved by a particular lender.
This can be useful because it will eliminate the need for sending out lots of applications at once, which can harm your credit. Prequalifying can also help to expedite the process of getting a loan. While it is an extra step, it can make getting approved after you submit a formal application significantly faster.
What is the Process for Getting Prequalified?
You will need to follow a number of important steps before you can get prequalified for a loan, including:
- Submit your request: The very first thing you will need to do is complete a prequalification request. This typically involves submitting some basic details like your income, name, and contact information. It usually doesn’t take more than 15-20 minutes.
- Wait for the lender’s response: Next you just have to wait for the lender to respond to your request. They will go through all of the information you have submitted and get back to you within 24 hours or so.
- Loan offer: If you prequalify for a loan, the lender will most likely present you with a preliminary offer. It will consist of various details like the interest rate you will get and how much each monthly payment is going to be. You can use this information to make a decision as to whether or not to apply
Applying
If you prequalify for the loan you want, you will need to fill out a formal application. You will be able to do this on the lender’s website, so it’s very convenient. Make sure that you double check the application before submitting it. You don’t want to send a lender an application unless you are sure that everything is filled out with accurate and up to date information. It usually only takes a few hours for lenders to respond to these applications, especially if you are already prequalified.
How to Improve Your Likelihood of Prequalification
There are certain things that you can do to improve your chances of prequalification for a loan, such as paying down your existing debt. Most lenders don’t want to give even small loans to those who already owe a significant amount to creditors. You should also avoid taking on any new debt while you are trying to get your loan. Your main goal is to look as attractive as possible to the lender, so keep that in mind.
Should I Prequalify for a Loan?
Pretty much anyone who wants to get a loan should consider prequalifying, as it can be beneficial for numerous reasons. It is especially important to do this if you have bad credit and think your application might get rejected.
Prequalifying for a loan can help you find out what your chances of approval are. It will also tell you what kinds of terms to expect, which can be useful when comparing your options. You never want to get any type of loan until you have taken some time to shop around. This research will make it possible for you to get the best deal on a loan, which could save you a lot of money. This process is very quick and simple, and you have absolutely nothing to lose.