How to Qualify For A Bank Secured Loan
How to Qualify For A Bank Secured Loan
Obtaining a bank secured loan isn’t often as easy as some people might think. Simply because you have good credit does not ensure approval. A lot of different factors are seen as part of the large picture, and though your credit history definitely plays a part in this chain of events, it is not the only thing that bank takes into consideration. How important a factoring item is dependent upon the loan officer and the bank.
Impact of your credit score: Your credit report has become the first elements that a loan provider considers who you apply for a bank secured loan. Some factors, obviously, will have a lot more impact than other peoples will. These elements will also vary from bank to bank, but there’s no question to the truth that your credit rating is the first factor that can affect your application for a bank secured loan.
Work stability and longevity: For those who have bad credit, but you have a stable employment history with job longevity, the effect on your application will probably be less than if you have bad credit with an unstable occupation.
This is specifically true for people who work within an industry that has frequent layoff for example the automotive or construction industry. Bank officers understand that if you’re no longer working or only being paid a portion of your usual pay some credit issues will develop.
By showing employment stability, you are showing the lender that you are a responsible person who just ran into some difficulties along the way when it comes to your credit.
Type and condition of collateral pledged: A secured bank loan means that there is some kind of collateral pledged by the debtor to secure the loan. This may be a vehicle title, second mortgage on your home, securities of some sort which are relatively liquid in nature, or a savings account or CD at the bank where you obtain the loan.
The more liquid the asset which is pledged, the more likely you are to obtain the loan, particularly if there are credit problems. The collateral preferred for a bank secured loan is property, with a property being the first choice and a car title the second option.
The explanation for these items being preferred is that they’re less difficult to acquire and sell in the event the loan goes into default. Property is preferred over employment stability simply because numerous areas throughout the civilized world don’t allow wage garnishments for anything aside from child support payments.
Final determination: Before the financial institution makes a final choice, he will consider your credit history, job stability, as well as the type of collateral you are pledging in order to assist him in making his final decision concerning your bank secured loan. He will create a decision based on everything and not on just one item, even though if you have bad credit in combination with deficiency of job stability, those will have quite a negative effect on your application and might cause the loan to be rejected unless you have sufficient collateral to counteract those negative elements.
Do not immediately assume your situation means your loan will be declined but rather sit down and discuss to the loan company and find out what your options are.
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