Getting a loan can be an arduous process from start to finish. Luckily, there are several things that both individuals and businesses can do to speed up the process. These tips also work for people who have less-than-perfect credit scores.
Go Through a Private Loan Business
There are certain protections and set interest rates that come with taking out a loan from a bank or a credit union. However, there is also a set bureaucratic process that comes with it as well. Going through a private loan business can help to bypass some of the red tape and get to what matters– taking out a loan.
Before you do this, make sure to research whatever loan business you plan to go through. Avoid “loan sharks” with extremely high interest rates. Looking up reviews can also be helpful. Trust Pilot has many loan business reviews, including SoFi, Avant, and MaxLend reviews. Interest rates, no matter where you get your loan from, can vary greatly based on a person’s credit score. The higher your credit score, the lower your interest rate is likely to be. According to Value Penguin, the average interest rate for personal loans can range anywhere between 9 to 22 percent. So, if a loan company has an interest rate higher than 22 percent, try to steer clear of them.
Get Your Paperwork in Order
Depending on where you plan on taking out your loan, the process can involve a lot of paperwork. You can help to speed up the loan process by having all of this paperwork ready before the bank even asks for it. Some of the common documents you need include the following.
- Documentation to prove your identity (ID, driver’s license, passport, etc.)
- Documentation to prove your address (mortgage, bills sent to your current address, etc.)
- Proof of monthly/yearly income (pay stub, tax return, tax transcript, business reports, etc.). If you are a freelancer with no fixed clients, you can generate pay stubs online too. Make sure to check out a few tools and you are good to go.
- Proof of monthly/year expenses (billing statements, mortgage, student loan payments, etc.)
Try to get as many of these supporting documents together before heading to the bank as possible. If possible, have both hard copies and digital copies of these documents. Some banks will prefer one over the other. If you do not know which your bank likes more, just ask.
Get a Cosigner
People who have a low credit score or have a short credit history may not be able to take out a loan on their own. That’s where getting a cosigner comes in handy. With a cosigner, the primary signer is responsible for the payments. However, if the primary signer cannot make the payment for whatever reason, then the cosigner is responsible for making the payment.
When you pick a cosigner, it should be someone who has a high credit score, or at least someone who has a higher credit score than you do. There should also be mutual trust between yourself and the cosigner so that both of you can trust each other to make the loan payments. It should be noted that the cosigner will also need to provide all of the same paperwork as the primary signer.
Taking out a loan can be time-consuming. By following these tips, you can make the process go by a little faster.
Read Also: Types of Business Loans