How do I qualify for a loan?

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Many people are probably wondering what they could do when considering of purchasing something like a house, or car, or even schooling. In most cases, these things are not paid with giant money bags. Instead, they are paid with a loan.

However, what are the loan qualifications that people need to consider when getting a loan?

To qualify for a loan, there are several things in one’s financial history that must be considered by the lender before deciding to give that loan to a potential borrower. Because someone is basically giving customers borrowed money and expect them to pay back the loan in some way, they tend to be picky on who they feel deserves a qualified loan.

In no order, here are the pieces of information that lenders may look at when determining their loan qualifications-

  • Annual income.
  • Social Security Number.
  • Credit score.
  • Credit history.
  • Payment history.
  • Pay stubs or income information.
  • Necessary collateral.
  • Bank information.
  • Bankruptcy history.
  • The ability to pay.
  • Veteran status.
  • Driver’s license.
  • Owns vehicle or owns home.
  • Other specialties or special loan qualifications not discussed above!

Whatever loan a person decides to get, some of these loan qualifications will be all filled out or needed. Once the lender gets all this information, expect a wait (or not) that could lead to a qualified loan for that lucky borrower. Of course, this may not always be the case, especially if the lender is looking for certain criteria from the information provided.

Just looking at all this financial information one might need, it could seem overwhelming for those that may not have the slightest clue on how to get started. Thankfully, LoanMart MoneyTalk is here to break down several types of loans that people will typically encounter online or even when driving around town!

With that in mind, look at the types of loans, and what loan qualifications people should expect from them.

The Difference Between Loan Qualifications for personal loans and other types of loans

When really looking at all the loans out there to choose from, there tends to be a few categories to choose from. Before looking over these categories, potential borrower should consider asking themselves the following questions when looking for a certain type of loan:

  1. Is there a specific purchase being made to warrant a loan for it?
  2. In need of funding that must be immediate?
  3. Is it a loan that has limits on borrowing, but is available whenever?

Looking at Question 1. The answer is perhaps someone is looking for a secured loan. A secured loan is usually when a borrower pledges some asset as a collateral. Examples of this includes a secured loan for a home or car. If one is looking to purchase either, they would get a secured loan, which are usually know as car loans for vehicles, and a mortgage loan for a piece residential property!

With secured loans, a person continues to make payments in order to pay off the entire loan, in which they have paid off for the piece of property or for the car.

Another example of a secured loan is a car title loan. How a car title loan works is a person can receive money (what can be done with the funding depends on the lender) with the title of their car, which is usually obtained after paying off their vehicle! As a secured loan, the collateral is the title of the car.

With collateral, if a person fails to continue payments on a secured loan, it could result a default on a loan, which could give the lender the authority to seize and retrieve the property that had not been paid off!

With that said, there are several loan qualifications that vary for a secured loan, but here are a few to keep in mind:

  • Government-issued identification.
  • Proof on the ability to pay.
  • Credit score (varies from the type of secured loan).
  • Credit history (also varies).

Many of these loan qualifications factor into the loan’s interest rates as well as expectations from the lender, who could deny a secured loan to someone who could not meet those loan qualifications.

Looking at Question 2, many of these loans are called unsecured loans, but let’s call them personal loans for convenience sake. Personal loans tend to have the advantage of being used for almost anything. These include payday loans.

What makes these personal loans work for many people looking for emergency financing is that it could be more immediate and tend to have less loan qualifications to consider. Here are just a few that most personal loan lenders will expect from a potential borrower:

  • Government-issued identification.
  • Proof on the ability to pay.
  • Employment information (varies).

These aspects is what makes unsecured loans very beneficial, but also risky. Even though someone is not losing anything, paying off personal loans can be difficult due to high interest rates or less than savory policies. That’s why most personal loans tend to be easier to receive for those with varying degrees of credit or having a unique financial history.

Looking at Question 3, we see a more familiar type of loan in the form of credit cards! Although technically not a traditional loan to most people, a person is borrowing money from a bank or other financial institution when making purchases for products and goods.

The loan qualifications for most credit cards require the following:

  • Social Security Card
  • Source of Income
  • Proof on the ability to pay
  • Credit history (varies by card)

To some, the credit card is great for smaller or less valuable purchases and really helps create credit that helps borrowers build up their history for a qualified loan from the other two categories above!

With the familiarity of these three categories of loans, what are the most important loan qualifications to consider?

What loan qualifications are the most important ones to consider?

Looking at any loans, the consensus seems to be to have the following:

  • Credit history.
  • A Social Security Card or some form of government-issued identification.
  • Proof on the ability to pay.
  • Employment information and a source of income.

Keeping these things on record and understanding that information means that anyone could be ready to know what to expect when it comes to loan qualifications, as well as reach the success of getting their own qualified loan!

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All loans will be serviced by LoanMart. See State Disclosures for additional information.

1Loan approval is subject to meeting the lender's credit criteria, which may include providing acceptable property as collateral. Actual loan amount, term, and Annual Percentage Rate of the loan that a consumer qualifies for may vary by consumer. Loan proceeds are intended primarily for personal, family and household purposes. Minimum loan amounts vary by state. Consumers need to demonstrate ability to repay the loan.

2Based on consumers who received a loan from LoanMart from February 2002 to October 2018.

3Application processes could take five (5) minutes to complete. Upon completion, a conditional approval may be given pending review of documentation. Funding time is based on the time from final approval following receipt and review of all required documents and signing, prior to 2PM PST on a business day.

4To exercise the right to rescind, the consumer(s) must notify the lender in writing by midnight on the third calendar day from obtaining the loan. Within one business day from notice of rescission, the consumer(s) must return any monies received and fees paid on behalf of the consumer(s) by certified funds.

5Lenders recommend and encourage consumers to pay early and often and more in order to avoid additional finance charges.

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