4 Things That All Loan Applicants Are Looking For

Did you know that in the first quarter of 2022, the U.S. household debt amounted to a whopping $15.85 trillion? That’s $270 billion more from the previous year’s fourth quarter.

All that shows how vital loans are, for, without them, most folks won’t be able to afford large purchases. That includes homes, motor vehicles, or even personal valuables.

So, if you’re now about to join the crowd of new loan applicants, it pays to know what to consider before applying. We listed the top factors below, so keep reading.

1. Low-Interest Rate

The interest rate is a percentage of the loan principal, the amount loaned by a lender to a borrower. It’s the primary way lenders make money from issuing mortgages or car or personal loans.

Interest rates vary, but they all have to do with borrowers’ creditworthiness. The more creditworthy loan applicants are, the lower the interest rate they can get.

To give you an idea, the average personal loan interest rate in February 2022 was 9.41%. It has sat at the 9% benchmark since February 2020.

If you have a good credit score, that’s the interest rate range you can expect when applying for a loan. You might even snag a lower rate if you have a very good or excellent score.

2. Few to No Extra Fees

Aside from interest rates, borrowers also consider origination fees as a deal-breaker. Lenders often deduct them from the principal, but they’re still part of interest fees. Some lenders also break them down and include them in the monthly repayments.

Fortunately, some lending institutions don’t charge an origination fee. They may also exempt borrowers, such as those with excellent credit scores.

3. Potential for Discounts

According to Srv1st.com, lenders have a way to see a borrower’s current and potential credit score. The latter, in turn, allows lending institutions to qualify applicants for a loan. Moreover, it lets lenders see if there’s a better program suited for each customer.

Some lenders may also decide to give discounted rates if a borrower’s score has the potential to go up. For example, they may offer a lower introductory interest rate. Another is a written agreement to cut the interest rate if the borrower’s score improves.

You can find out your credit score by calling one of your credit card providers. Many issuers often provide this information for free. You can also conduct a credit check on yourself by requesting a copy of your report from credit bureaus.

4. Online Processing and Funding

Many loan applicants now factor in convenience when applying for a loan. Thus, to them, the best loan providers are those with a 100% virtual application process. They also prefer lenders that quickly fund applications through digital banking.

Loan Applicants: Always Consider These Factors

And there you have it, the top factors all loan applicants, including you, should consider. As you can see, many of them trace back to creditworthiness, as it has the most influence on interest rates. So, it’s best to boost your credit score and ensure your report is error-free before applying.

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