When shopping for a loan for a car, or other purpose, there are a few ways to increase your chance of approval:
- Know that the bank, credit union or lending institution will verify all of the information provided in the application. This includes your employment status and credit history. The process is undertaken to assess the likelihood of your paying the debt off. Banks are a business, and they earn their returns on the money that they lend to customers, so they will do everything they possibly can to prevent any losses. Make sure that the information you provide is correct and accurate.
- Know your credit score. There are several online resources you can use to get a free copy of your Credit Report.
- Do your homework and choose the right loan, research lenders. Even if you don’t have the best credit rating, some lenders will consider other factors when analysing your loan application. If a major bank rejects your application, a local bank, or a credit union could still be an option.
- Enlist a co-signor
- Pay down existing debt. Maybe you wait a bit for the loan.
Most people now need some sort of loan over their lifetime, whether that loan is to help pay for post secondary education, for a car or a mortgage. By following the above tips and suggestions you will not only increase your chances of being approved for a loan, you will also improve your credit score, and overall long term credit worthiness.
Add some planning and budgeting into the mix and you’re setting yourself up for a lifetime of financial stability.
In addition to following the above tips for increasing your chances of loan approval, it is a really good idea to shop around and compare rates. Trying to find the best rate for a bank loan can seem daunting but it’s worth it. If you are able to find a bank with just slightly lower interest rates, you could save hundreds, or thousands, of dollars in interest and fees throughout the lifetime of your loan. For this reason, you should compare your loan options and shop around to get the best rate possible.