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How Are Loan Approvals Worked Out

10 March 2023

The cost of living is impacting individuals and families across the UK, presenting tough decisions for all. Whilst some refuse to put their central heating on to conserve energy and reduce their monthly bill cost, others are having to contemplate their monthly financial priorities just to get by. With the cost of household bills and food seeing rises, many are looking at the financial alternatives available to support them during what is a challenging time that few of us could prepare for.

Despite the stigma associated with applying for a loan, it can provide some financial release to families who are experiencing difficulties. With that in mind, we’re taking a closer look at the application process and how loan approvals are determined for online options such as short term loans. This can help to make sure you apply for the right type of loan for your situation, such as emergency loans to cover an unexpected bill, when you need money quickly.

What is a Loan?

A loan is essentially a borrowed sum of money from a lender which you are liable to pay back within an agreed time period plus additional interest that arises as a result. Whilst the application process is relatively straightforward, whereby you state the amount you would like to borrow and provide information about your identity, address, income, credit score and monthly expenses, your loan being accepted often depends on other elements of your life.

How Are Loans Approved

The loan approval process is long and stringent and for good reason. Lenders want to ensure you are able to sustainably pay back the money you have borrowed within the agreed timeframe without getting into debt or trouble. Due to this, they consider all parts of your loan application and often carry out checks to make sure that the information you have provided is accurate and up to date. For some loan applications, you are required to provide evidence such as your proof of address to verify that you are who you say you are and reside in the address provided. This is to prevent fraudulent applications and other criminal behaviour.

How To Get Approved For A Loan

Now you understand the information and evidence that’s required of you when applying for a loan, the next step is to get a good idea of how you can increase the chance of your loan application being accepted. Here are a couple of ways how to get approved for a loan.

Review Your Credit History

Lenders are likely to look at your credit history before considering approving your loan application so, to avoid disappointment, it can be beneficial to review your own credit history before applying. That way, you have a good understanding of your credit score and how it may improve your chance of being successful. You can then make an informed decision whether to try to still go ahead with your loan application or wait until your score has increased.

Cut Back Spending

Knowing when to cut back on your spending can be difficult but doing so may put you in a better position to apply for a loan. Reduced spending showcases to lenders that you are aware of the finances you have going into and out of your bank account and that you are not just applying for a loan to pay off your unorganised spending habits. Instead, it showcases that you are in a good position to make repayments.

Ensure Repayments Are Realistic

When applying for a loan, you want to make sure you can pay back your borrowed amount within the time provided. Whilst it’s sometimes easier said than done, to avoid getting into debt or trouble, always make sure you can afford to repay what you borrow from your normal monthly budget without problems. That way, you can be confident in the amount you owe back which is a huge plus now and in the future when you may want to apply for a further loan.

How Long Do Loan Approvals Take

Another commonly asked question is ‘how long do loan approvals take’ and, whilst generally a loan application is accepted or declined relatively quickly, that time can vary for each case. This means that one application may take minimal time to accept but further questions or evidence is required for another. Due to this, there’s no definitive way to guarantee that you will receive your loan within a stated timeframe. What you can do to ensure the process is carried out as quickly as possible is to provide everything that’s asked for as part of your application, preventing lenders from having to contact you for further details.

There are several different types of loans out there suitable for many needs from bad credit loans, to debt consolidation loans. Regardless of which type of loan you’re looking for, they are there to support you through financial difficulty, providing a safety blanket to those who are in need.

If you are looking for more information about the different types of loans available here at QuidMarket, please browse our website. For further information if you need help with your finances, please visit Money Helper.

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