Category: General

7 Ways to Qualify for a Higher Loan Amount

If you have tried to apply for a more significant loan amount and got a rejection, you might not have met the lender’s criteria. Some of the factors that can affect the approval of your loan are your credit score, your income, and your debt-and-income ratio. Before you submit your next loan application, making sure that everything is in order can help you get the loan amount that you need. Here are also some ways to qualify for a bigger loan.

  1. Raise your credit score

A high credit score will make it easy for you to get loan approval for more significant amounts at a low-interest rate. People with excellent credit ratings can quickly get a lender’s approval and qualify for higher loans. With a reduced price per annum, your lo proceeds can increase by several thousands more.

Another thing that you should think about is your credit card balances. Pay your debts in full if you can because this will raise your credit score several points. If you cannot pay in full, make sure that your balances must be lower than your credit limit by 15%. Expect your credit score to go up so that you can get loan approval fast.

  • Make a down payment of 20%

When you get a high loan for a home, the lender would require a PMI or private mortgage insurance that can cost 1% of the amount that you borrowed per year. If you borrowed $500,000, the PMI could be $5,000 per year. The PMI can cost much if your loan is payable within 20 years.

Making a 20% down payment would reduce the amount you borrowed and translate into a smaller annual percentage rate. You would be able to buy a more expensive home because you can enjoy a lower percentage price.

  • Offer compensating factors that improve your debt-to-income ratio

Another way to qualify for a more significant loan amount is to offer compensating factors to prove that you can pay back the loan. Most lenders would ask you why he must loan you a large amount of money. Contributing the compensating factors you have can make approval possible. Your compensating factors include your high credit rating, a stable and high paying job, and a flourishing business. You can show the lender your income statement, cash reserves in banks, and other assets.

  • Get an adjustable payment rate

During the first five years of the repayment term, you will have a meager fixed payment. After the 5th year, the monthly dues will increase, making it faster to pay off your loan. To prevent your monthly dues from growing, refinance your loan before the 5th year. One advantage of refinancing is that you can have a minimal mortgage payment, and you can enjoy substantial loan proceeds.

For a home loan, some lenders offer a repayment term of 40 years with a fixed rate. Because you can pay your debt within 480 months, your payment due will be lower than when you have to pay within 25 years. You can afford to pay the monthly amortization even if you borrow more.

  • List down all income sources

To get a higher loan amount, you must show that aside from your regular income, you have other sources to have the money to pay for your loan. Ask your loan officer what revenues are eligible for the credit you want to take. Generally, additional income includes alimony and child support, mortgage income, dividends, foreign income, car allowance, capital gains, disability income, royalty payments, trust income, social security income, unemployment benefits, mortgage credit certificates, and car allowance. Including your earnings from other sources can improve your debt-to-income data and increase your chances of getting a higher loan.

  • Have a co-borrower

If your income does not meet the requirement of the lender, you can find a co-borrower. Your co-borrower will let you include his income to improve your debt-to-income ratio. In case you default, the co-borrower will pay back the amount you have borrowed. This is a risky arrangement on the part of your co-borrower. Ask someone very close to you to be your co-signer because other people might refuse to take the risk.

  • Do some shopping

Checking the loan offers of several lending companies can provide you with several options. Comparing the loan amount, annual percentage rate, repayment options, and criteria for borrowers will help you find a lending company that gives you the best offer.

With the information you got from several lenders, you can negotiate the rates and other fees, as well as the repayment terms. If you are a good negotiator, you can get a higher loan at a minimal cost.

If you need a more substantial amount to make significant purchases such as a house, consider these tips to qualify for a higher loan and make your dream a reality.

5 Simple Ways to Get a Loan If You Have Bad Credit and No Job

Having a bad credit score is always a disadvantage when it comes to borrowing money from a bank, however, most will agree to let you borrow the money if you either provide collateral or have a stable source of income that proves the fact that you will be able to make the monthly payments on time. In this situation, the main disadvantage will be that the bank will want more control over how you repay the money, and you may have to deal with slightly higher interest rates.

This having been said, what happens when you have bad credit and are also unemployed? Most banks will require you to have a job before they agree to lend you the money that you need. Luckily, there are several ways to circumvent this issue. Here is what you need to know:

There are 5 ways to get a loan if you are unemployed and have bad credit:

  • Have an alternative source of income

Regardless of where you borrow the money from, you will need to have a stable source of income. For some loans, you will be asked to have a job, but there are also some that you can access by having an alternative source of income.

These sources include a wide variety of income sources, such as unemployment, retirement, and child support or disability benefits. In extreme cases, you will also be able to include the income of a spouse or partner, as long as you can prove that you do have access to the funds.

  • Find a co-signer to help you

Most banks will agree to give you a loan, as long as you find someone to co-sign the agreement. This person will have to agree to vouch for you and repay the loan if you are unable to. Keep in mind that it is usually better to find a co-signer that has a great credit score and a high income. The creditors will look at these details when considering if you are eligible or not for the loan, however, they will also affect what interest rates you will have to pay.

  • Provide collateral for your loan

Even if you do not have a job, you will be able to get a secured account that is guaranteed with your property. Depending on the amount of money that you need to borrow, you can put up your car, your home, or other objects that have value to the bank that you work with. If you provide enough collateral, it will not matter to the creditors if you are unemployed or not.

As a working, keep in mind that if you are unable to repay the loan on time, the creditors will be entitled to take the property that you put up as collateral.

  • Get a cash advance

If you only need a small amount of money, it is possible to get a cash advance loan from an ATM. However, this type of loan does have certain disadvantages. First of all, there is a limit to how much money you can borrow. This makes this type of loan useful in certain situations where you need money to pay a utility bill or to get groceries.

Secondly, cash advances do not fall under a credit card’s grace period. This means that it will start accruing interest the instant you take out the money.

  • Use an online service to get a short-term loan

If you need under $1000, you should be able to get a short-term loan from a P2P lending website or an online commercial lending company. Both of these types of platforms can be used to take out small loans without having to worry about credit score. Some do not even require you to have a source of constant income, however, they will limit the amount of money that you can borrow.

The most important thing to remember when it comes to using online lending platforms is the fact that their evaluation process is streamlined when compared to the ones that banks have. This makes it possible to get a short-term loan in under 24 hours.

The downside is that the interest rates are typically higher than the ones offered by banks.

Conclusion

Each one of these 5 methods will help you get a loan regardless of how bad your credit score is. The fact that you are unemployed will not matter either. This having been said, keep in mind that getting a loan by putting up collateral, or having someone co-sign for it may not help you improve your credit score. Using online platforms to get a short-term loan may not even be registered in your permanent financial records due to the fact that most companies do not report these transactions to credit registers.