Loan pre-approval may seem an unnecessary extra step when you want to borrow money through a loan, but it is actually very worth it. Applying for mortgage pre-approval is pretty standard nowadays, because it helps applicants pinpoint issues. Consequently, it makes sense for pre-approval to be the first step for personal loan borrowers too.
Pre-approval loans offer so many benefits you’d be crazy not to take advantage of them. Here are some of the most notable.
It’s Fast
Luckily, when you’re looking for personal loan pre-approval, you only need to go through the application process once. Some companies have access to many lenders that offer a wide range of products. All you need to do is provide your personal information and the company immediately provides you with the best possible matches for your needs and your financial position.
Less Paperwork
Loan approval always includes verifying your income. Luckily, many lenders shorten the process during pre-approval by offering digital income verification through your financial institution. This occurs safely and almost instantly and you don’t need to do a thing.
Since the lender already has proof of income, the process is very quick when you decide to borrow. Traditional lenders can never match the speed of a trusted, proven online process.
Offerings Align to Your Needs
Applying for personal loans individually through multiple lenders is a waste of time and energy. Fortunately, when you use a lender network, you’re immediately directed to appropriate products. You don’t need to search through thousands of offerings and you never need to worry about applying for the wrong loan type.
Lower Cost
Choosing a company that deals with many lenders also means you can immediately compare lender offerings since you’re receive loan terms within minutes. This usually includes your qualifying amount, the APR (annual percentage rate), and your estimated monthly payments.
By choosing a lower interest rate, you lower your monthly payments, and save hundreds or thousands of dollars over the life of your loan.
Great Negotiating Tool
If you have a decent relationship with a bank, credit union, or other lender, you may be able to use your pre-approval terms as leverage. Negotiate for a better rate or demand fewer fees and charges. If your current lender is not willing to budge, just follow through with your pre-approved lender. Alternative lenders can save you money.
Loan Pre-Approval Improves Your Odds
No matter your credit score, loan pre-approval may improve your odds of obtaining a loan, since you’re dealing with multiple lenders. Consequently, if you have marginal or poor credit, you should definitely choose this method.
Pre-approval loans for bad credit take you one step closer to getting the money you need, without frustrating denials and time wasted. A low credit score isn’t a barrier to personal loan pre-approval and since you only need to go through the process once, why not?
Can Eliminate Fees & Charges
Loan pre-approval also highlights the fees and charges associated with a particular loan. Luckily, many online lenders do not charge unnecessary fees. However, some do as well as most brick-and-mortar lenders.
When you have personal loan pre-approval through a lender that doesn’t charge origination fees, pre-payments penalties, or other charges, you can ask the competitors to match what they offer. Otherwise, reduce your overall cost of borrowing and choose the no-fee lender.
No Need for Collateral
Personal loan pre-approval can also eliminate the need for collateral. The lender’s decision rests on factors such as your income, credit score, and debt ratio. In some cases, the lender may offer pre-approval loans based on your income alone.
Consequently, personal loan lenders normally do not ask you to back the loan with an asset such as a vehicle or home. In fact, many lenders aren’t interested in the specifics on how you’ll use the money. They just want to make sure you have the means to repay your loan.
Nonetheless, it is easier to qualify for a secured personal loan. For instance, if you need to buy a car, it is more likely you will qualify if the lender puts a lien against it. However, you could lose your collateral if you fail to make payments. That’s a risk many people do not want to take, so no-collateral loans are a better choice.
Borrow Without a Co-Signer
Fortunately, many lenders offer loan pre-approval without asking for a co-signer. If you have a short or no credit history select lenders will still offer you a pre-approval loan.
Yes, the lenders terms will reflect your credit and financial position, but many are even willing to offer pre-approval loans for bad credit. If you handle your loan well, you may strengthen your credit history and your credit score over time.
Of course, there may be times when lenders won’t grant you pre-approval without a co-signer. Nonetheless, it is better to find out quickly instead of trying many lenders without success. Pre-approval allows you do that.
No Long Waits
Getting loan pre-approval can be incredibly fast. However, the benefits don’t stop there. Should you choose a personal loan from one of the lenders offered, the rest of the process is usually very quick too.
The lender verifies your eligibility and if everything is in order, they start the loan process at once. This involves signing your loan papers digitally and setting up a payment schedule that coincides with your pay periods. Many lenders do all this in hours or a few days.
Money in Your Hands Quickly
Getting personal loan pre-approval usually leads to a fast funds disbursal. After all, it is just a matter of verifying your application information, signing your loan contract, and setting up your repayment method.
Many lenders can move from loan pre-approval to a funds transfer within a few days. That’s certainly not the case with most banks and credit unions. They can take days or weeks.
You Don’t Have to Use It
If you get loan pre-approval, you aren’t obligated to follow through. Nonetheless, it can be highly beneficial to know that money is available to you if you have a sudden financial need. All you need to do is access your account to restart the lending process.
No Initial Credit Score Impact
When you seek personal loan pre-approval, lenders usually use a soft credit inquiry to determine your eligibility. This does not affect your credit score.
However, when you decide to borrow the lender may perform a hard credit inquiry to thoroughly check your financial position. This can temporarily lower your credit score, but once you start making timely payments it will rise again.
Wider Variety of Terms
Traditional lenders offer specific products that may not fit into your lifestyle or goals. Luckily, loan pre-approval through online lenders may lead to a wider variety of terms including longer repayment periods.
More Customer Service Options
You may also enjoy a more personalized customer service experience since many lenders offer extended business hours. You may be able to text, chat, or email for quick answers. This can be very helpful if you are very busy during the day, you prefer an online experience, or you work odd hours.
Many lenders also offer handy payment and repayment calculators so you can easily see how the loan could affect your finances.
Preparing for a Pre-Approval Personal Loan
If you’re considering a loan, review your credit report first. Fix errors and then start the pre-approval process. You can also follow the tips mentioned here.
Definitely apply for loan pre-approval through a website that accesses many lenders. Always provide detailed, accurate information on your application form.
Unfortunately, many people are disqualified because they don’t check their application form before they submit it. Missing or inaccurate information during pre-qualification can lead to a loan refusal.
Basic requirements for a loan include identifiers such as your name, address, phone number, and email address. You will also need to provide a valid Social Security Number or Individual Taxpayer Identification Number.
Finally, you need a bank account with an American bank or credit union institution. Lenders need this information to confirm your identity and income, but also to transfer funds into your bank account. Lenders want to see a steady source of recurring income. Employment, self-employment, disability, or a pension may qualify.
Get a Pre-Approval Loan Today
FlexMoney connects you to huge network of lenders that offer everything from quick cash loans to personalized installment loans. Our process curates offerings to precisely align with your unique financial needs.
FlexMoney USA’s online loans connect you to lenders across the US. Borrow between $200 to $35,000 through our pre-approval loans and enjoy a simple, safe, fast process and outstanding customer service.
Use your loan for a multitude of purposes, including unexpected car or home repairs, emergency expenses, moving costs, medical bills, and more. The process is so simple it is easy to get money for whatever you need whenever you need it.
Don’t wait. Apply today and take advantage of the benefits of a pre-approval personal loan. Save time, money, and frustration and get on with life.