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Basis for the Cheapest Personal Loan Rate
By: John Mussi
In the financial world, there are many factors that contribute to what we perceive is the cheapest personal loan rate. This perception differs from individual to individual, and even from lender to lender. Each situation may differ, and as such, the lender may have to apply a different set of criteria to each individual application. Unfortunately, in the financial world there is never one set of rules that will apply to every situation, so you have to look at each one on its own merit.
Secured or unsecured loan
One of the first factors the lender may need to determine is whether, based on the information he sees on the application, you qualify for a secured or unsecured loan. Of course, at this stage of the loan process, he is only making a guess because until he does the credit investigation and sees your credit score, he will not know if you qualify for the cheapest personal loan rate, or if you qualify for an unsecured loan. Only after all of the investigation is complete can the lender know for certain what type of loan and interest rate he can offer you. Even if your credit is good, there may be other factors that will influence his decision. Some of those factors may include:
? Unstable work history (short time on job, too many jobs, etc.)
? Banking history
? High credit experience in relation to the amount of funds needed
This does not diminish the need for good credit by any means because without that, you would likely be subject to much more scrutiny. However, if you have recently begun establishing or re-establishing credit, that is going to have an effect on the credit score, and thus, may influence the lender?s decision in regard to how much credit he is willing to extend without security.
Other influential factors
The financial criteria that each lender uses vary from lender to lender, and even from lending officer to lending officer. This makes it difficult for the potential borrower to get a feel for what he can expect, but when a lender is ready to make the final decision, he has to use his instinct to make a final decision since most borrowers will not have excellent credit and five or more years with the same employer. It is probably less than one percent of borrowers who fit into a category where a lender can decide rapidly without a second thought, so with the facts in front of him, the lender must determine what kind of faith he has in you. With everything else weighed, this is the final criteria he can use to make his decision, so you must make the right impression on the loan officer.
Why is it so difficult?
A loan officer never has an easy time deciding which customers are qualified for the cheapest personal loan rate, and he is certainly not looking to deny credit applications because his company doesn?t make money that way by any means. However, when a potential borrower doesn?t meet the criteria for the cheapest personal loan rate, the lender must decide if he wants to offer a higher rate or deny the application. In most cases, he will offer a higher rate and leave it up to the borrower to accept of decline his offer. That doesn?t mean you have bad credit, it may just mean you have a weak credit score and will need time to bring it up, something only experience will accomplish.
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About The Author
John Mussi is the founder of UK Personal Secured Loans who help homeowners find the best available loans via the http://www.uk-personal-secured-loans.com website. |
