Applying to the pre-approval process is an essential step to receiving personal loans, especially when you are a single mother and need emergency cash. While it could appear to be a bit of a dividing line but the process is distinct from being officially granted.
Pre-approval lets you look around for various lenders without damaging your score. However, this isn’t a promise you’ll be approved for personal loans. This is what you need to be aware of.
What is Personal Loan Pre-approval?
A pre-approval is the first step in obtaining approval for personal loans with a co-signer. “It’s important to do a pre-approval first, to be sure of what you’re doing,” says Trina Patel, Financial advice manager of Albert, an app for managing money.
If you are looking at loan options and requesting pre-approval, multiple lenders conduct an informal credit assessment that won’t affect your credit score. To qualify for a same-day personal loan online application before the cut-off time.
When you request a loan, it will result in the process of a hard credit check, which is a negative one, and will stay on your credit file for as long as two years.
The process of getting pre-approval is and should always be entirely absolutely free. In the process of pre-approval, the lender will look over your credit scores, credit history, and your income, and other financial assets.
The goal is “to determine whether you’ll be capable of repaying your loan,” Patel says.
If you are eligible for pre-approval, your lender will issue you an offer letter that includes the loan amount along with a rate and conditions. Suppose you decide to accept the personal loan offers.
In that case, you will need to complete the formal application procedure that requires you to submit documentation, including pay stubs and IDs, and a Social Security number.
Remember that pre-approval doesn’t constitute a guarantee. “It does not guarantee that you’ll be accepted,” says Tara Alderete, manager of learning and enterprise in Money Management International, which is a non-profit financial counseling and educational agency. “If you get an approval, but something happens in your credit or income], then you could yet be denied that credit,” says Alderete.
How To Apply For Pre-Approval Personal Loans
The general rule is to follow the procedure for applying for a pre-approval of a personal loan.
Complete the formal loan application for pre-approval through a lender’s website:
You’ll be asked about your earnings, employment status, and debt; however, you don’t have to submit any proof of income at this time.
The lender will perform a soft credit pull
that is to say: the lender will look at your credit report, including your monthly payment history, and determine if you’re a dependable borrower.
You can get a pre-approval If you meet the criteria:
If you’re eligible for pre-approval, lenders will offer personal loans that will contain the maximum amount it is willing to extend and the interest rate of any other loan term. In the event that you don’t get through the soft credit screening, the application will be rejected.
Take a choice:
You may choose to take the pre-approval or decline it. The lenders differ in the length of time a pre-approval will last, and the likelihood is that it won’t be longer than one month.
If you accept the offer, you’ll be required to submit documents that demonstrate your earnings, employment, or assets, along with personal details like your Social Security Number.
The procedure to apply for pre-approval seems simple. However, there are some points to remember when looking for and selecting an individual loan officer.
Don’t choose the first lender to offer you pre-approval. Explore other lenders and discover the different types of loans available.
We suggest seeking personal loan approval from credit unions, banks, as well as aggregators of lending (like LendingTree), peer-to-peer lenders (like LendingClub), and special lenders (like SoFi). Make sure you cast as wide an eye as you can.
There’s no limit on the number of pre-approvals you can apply for. Since pre-approval is a soft credit check, your credit won’t be affected by filling out more than one application.
“That’s what’s so appealing about the pre-approval method,” Alderete says. “You will have a clear picture of what the personal loan is going to be like without damaging your credit score.”
Read the fine print carefully and loan terms.
Review the offer thoroughly before you accept the offer. It is essential to ensure the amount of loan and the interest rate you want are in line with your needs. However, you’ll also review the other terms for the loan, including the origination fees.
(one-time cost to complete the loan, typically between 1 and 10 percent of the amount of the loan) and penalties for prepayment (a charge imposed on those who are borrowers to pay off the loan in advance).
“You must ensure you’re not subject to any of these penalties,” Patel says. “If you’re able to make your loan monthly payments sooner or put an extra amount towards your loan, the chances are you’ll be able to do so without having to pay more.”
Make Sure That The Pre-Approval is Expired Before You Take The Offer: Personal Loans
A pre-approval deal will not last for long. It’s impossible to apply for pre-approval for an individual loan and wait in the waiting room for a few months.
“You’ll have to make the decision swiftly generally within about a week or so,” Patel says. Loan providers are aware that financial conditions are subject to change, which is why lenders offer pre-approval loans which are usually quick-term solutions to assess the possibility of paying back the loan.
You can take out more cash than you’ll need
A person with a good credit score could be pre-approved for more than they initially requested. But even if you can get a higher amount of loan isn’t a guarantee that you must take the offer.
“If I had a plan to obtain a personal loan of ,000 to repair my home, I would not want to take anything more than that,” Alderete says. “That’s one of the problems people get through — they want $5,000 and are granted $10,000, and end up in greater debts than had planned.”
- financial protection
- hard credit pull
- financial institution
- basic personal information
- credit bureau
- home equity loan
- secured loan
- credit union
Jason writes about all financial topics such as loans, debt solutions, and bankruptcy. He is an expert when it comes to subjects like APR, loan fine print, debt collection laws within the United States. With his in-depth knowledge of all things financial, he is a great asset to Greendayonline.