Loans 3 Factors that increases your chance of securing a loan

[Abigael]

We all come to a point in our financial lives where taking a loan is the only option left. It could be from a bank, online loan lending applications or other loan lending institutions. Most of those loan lending companies will not give you loans easily, so here are factors that I have observed to increase your chance of paying back the loan:

1. Clear ability of paying back the loan - this is in such cases where you are running a good business or you are employed and receiving a good amount of salary.

2. Having a positive credit history - when they see that you have been good at paying back your previous loans, the institutions do not get a hard time giving you a loan.

3. Giving a high quality collateral - banks especially will require you to give collateral before taking a loan. So giving them something that is equivalent to the amount of loan you want increases your chances of qualifying for the loan.

What other factors do you think increases a person's chances of securing a loan?

 

[btaliat]

The chances that one needs depends on the sources of the loan. A family or friend's losn only require total trust and assurance that the loan will be paid as and when due. But if it bank loan., there must be need for strong and quality collateral to serve as backing that the loan will be repaid.

 

[Good luck]

All the three factors stated mentioned above are really good qualities of a securing a loan ina reputable company or financial institutions like banks and your request will be granted but the most important thing is you must have a good profile records when it comes to getting a loan from financial institutions and have good mind of paying back as at when due or at a given time.

 

[Mika]

I agree with all of these points. Even when you are trying to get a business loan (that you are supposed to payback from the revenue generated by your business), you will have to show your income source (other than the business you are trying to establish), so that the banks can be sure that you can pay back.

 

[Deleted member 28127]

The choice of person that will accord you a loan is extremelly important because most of people are thinking if they are according loans to friends or relatives or collegues of work they have previous idea that this will destroy friendship relationship and then heard that many people doesn't pay back their duties at time and therefore this will let the objective of getting a loan harder day after day especially if most of people have at least one bad loan experience.

 

[Alexandoy]

Aside from the basic requirement of a bank loan - capacity to pay and willingness to pay - the collateral is one big issue most of the time. The loan is usually a maximum of the amount equivalent to 50% of the value of the collateral. Sometimes they allow up to 60% when you have a fixed job that pays well.

 

[Jasmine]

If you are trying to get a loan from a private lender, all you need is a connection that you can use as a security bond. Private lender will lend only to those who haves been recommended by someone he trusts. You might also need something to give as collateral.

 

[Deleted member 28127]

If you are trying to get a loan from a private lender, all you need is a connection that you can use as a security bond. Private lender will lend only to those who haves been recommended by someone he trusts. You might also need something to give as collateral.

This is just because if you are unable to pay this part fully for this month like for example you have a debt of 100 $ monthly for 12 months for borrowing 1000 $ for one reason or another. It is supposed that you pay 100 $ this month but your earning is just 70 $ this month due to unwanted expenses. The trusted person pays the difference means remaining 30 $ and then by end of loan money that you borrow from trusted person you pay him back by your way.

 

[Caramelle]

A steady and stable source of income is a very important factor in determining one's eligibility for a non-collateral loan. Banks go beyond determining if you are employed. They also check your source of employment. Some banks avoid lending money to employees of certain industries that are considered high-risk.

Having your own house can also be a plus factor in a potential borrower's favor. It means that you have an asset that they can run after when you lose your job or business.

Banks will not just look at your credit payment history. They will also be interested in your credit utilization ratio. This is the percentage of the loans you owe over the total credit available to you. A low ratio indicates that you have been managing your finances well and generally avoiding debts.

 

[Mellorando]

Business loans are a frequently used resource to help support a company's growth. The tricky part is getting the capital when it is needed. If the company doesn't prepare for getting a business loan far in advance of when they require it, the lack of a cash infusion may be detrimental to the company in the long run. That's why I believe it is important to always be prepared to apply for a business loan. Here is what the company can do right now:

1. Have your current financial statements.
A company needs to have detailed year-to-date results. This is the first thing that any business loan source will want to see.I recommend that business owners review their financial statements for accuracy and to understand what they mean to past and future performance. To help analysis, it's best to include a comparison to the previous year or quarter.

2. Measure free cash flow.
Are you able to explain the sources of free cash flow that will be used to pay back any loan? (Free cash flow is the amount of cash that the company has at the end of any given period that is not required for the operation of the business.)

3. Boost sales growth.
In my experience, lenders like to see at least a 10-percent revenue growth year over year. Business loan sources like companies whose sales are growing rapidly. Why? Because they want to fund growth, not fill in for losses. They believe that growing companies are in a better position to pay back debt than shrinking ones.

4. Monitor business and personal credit scores. Business loan lenders like numbers and will always check scores.
A business credit score usually ranges from zero to 100. Paying vendors on time is a great way to boost this.Personal credit scores are typically from 300 to 850. The formula for boosting this is a bit more complicated. It can take into consideration the amount of outstanding personal debt, the credit still available and the lack of late payment flags.

5. Build relationships with possible lenders. Ultimately, people make business loans to a person, not a business.
This means that company owners can benefit from cultivating relationships with lenders far in advance of ever applying for a business loan. This way, the source may be more likely to give the loan when the company needs it.

6. Be willing to risk personal collateral.
Business loan lenders feel more secure if the debt is backed up by a personal guarantee from someone (likely the owners) who has significant financial assets.This is because it is nearly impossible to recover a loan when a company goes bankrupt, and much easier to put a lien on a property or a stock portfolio.Similarly, lenders believe that owners will be more careful with their money if they are risking their own at the same time.