In an era when the risk of obtaining a credit facility is ever-increasing, getting a loan may seem like a tedious task. Although the process of acquiring a soft-loan facility may appear to have been liberalised, one false step in the process might incur dire consequences.
What Really is a Loan?
A loan is money you borrow from a bank or other financial institutions with consistent monthly repayments made over a set period. There are two types of loans: secured and unsecured. Simply put, unsecured loans are those that are not supported by collateral while secured loans are supported by collateral. As a potential lender, if you do not qualify for an unsecured loan, you can opt for a secured loan. Remember that in taking out a secured loan, you run the risk of losing your collateral should you become unable to pay off your loans.
What To Know Before Applying For A Quick Loan
Before you begin the process of applying for a quick loan, it is important to put together all the documents and information you need along the way. Although the documentation may differ from platform to platform, some of the basic requirements include a personal identification such as a driver’s license, National Identification Number (NIN), Bank Verification Number (BVN), and/or international passport. You may also need proof of income, employer’s information, and proof of residence such as a utility bill with your name and address or a lease agreement.
Putting all these together will allow you to move through each step of the process efficiently and get your funds as quickly as possible.
Having decided to take a quick loan, the following steps listed below will help speed up your loan application process.
Do the Math
A loan is not a handout, or in today’s parlance, a freebie. This means you must pay it back, with some interest of course. As a borrower, the last thing lenders want is for you to take out a loan of any form and not afford to pay it off. While lenders typically do their due diligence to make sure you can repay the debt, it is smart to run your own numbers to make sure it will work out. Have in mind that some lenders require an origination fee which is deducted from the loan proceeds. Make sure you borrow enough to get what you need after the fee.
Also, determine how much cash you will need. Play around with the numbers to get an idea of what the loan will cost you and decide if your budget can handle it.
Maintain A Good Credit Score
A good number of lenders will run a credit check to determine how likely you are to repay your loan. A credit score is a two or three-digit figure used by lenders to assess the risk profile of a customer when they want to borrow money. Ensuring you do not have an outstanding loan with another lender, especially for first-time borrowers is one way to shore up your chances of getting a good loan offer.
For returning borrowers, it means making sure your past loans were paid on schedule. If your credit score is low for some reason, you may still have a chance to get a loan, but either the interest rates and fees may be too high to make it worth it, or the loan amount would be reduced. NairaCompare’s credit checker tool can assist you with this. You can also see more about maintaining a good credit score here.
Consider your options
There are different kinds of quick loans, so it is important to know the exact credit facility you seek. Depending on the loan outfit, you may need a guarantor to get you approved for a personal loan with a decent interest rate. If you cannot find a guarantor, you may have the option of getting a secured loan which will mean providing collateral such as a vehicle, a house, or even land. In a situation where you do not meet the typical qualifications and your purchase can wait, take some time to build up your credit score so you can qualify. Depending on the urgency, some would opt for a smaller loan amount that can be quickly paid off to increase their credit score.
Provide Necessary Documentation
Every lender is different when it comes to what you need to apply. Once you submit your application, your lender will ask you to provide some additional documentation. For example, you might need to upload or fax a copy of your latest pay slip, a copy of your driver’s license, or proof of residence.
These days, borrowers are asked to snap a selfie to further establish their identity. Other than that, the lender will let you know if it needs any documentation from you and how to get it to the right person. The faster you provide the information, the sooner you will get a decision.
Scout Around for The Best Quick Loan Rates
One mistake most borrowers make is settling for the first offer they receive. Be sure to take some time and shop around for the best possible interest rate. Thankfully, NairaCompare has aggregated several types of lenders and loan types to give an idea of what you qualify for. With NairaCompare, you can find the best quick loan offers from banks, credit unions and online lenders. If you have been a long-time account holder with your bank or credit union, consider checking there first.
Pick A Lender and Apply
After you have done your research, pick the lender with the best offer for your needs, and then start the application process. Depending on the lender, the loan could take minutes, hours, or days to get approved. Also, with some lenders, you can do the entire application process online while others may require you to apply in person at your local bank or credit union branch.
Every lender is different regarding what information they need on the application. As earlier stated, you will typically need to provide your name, address and contact information, your income and employment information, and the reason for the loan.
The lender will also request you share how much you want to borrow. It may then give you a few options to consider after a soft credit check. You will also have a chance to review the complete terms and conditions for the loan, including fees and your repayment period.
Accept the Quick Loan and Start Making Payments
After the lender notifies you that you have been approved, you will need to finalize the loan documents and accept the terms. Once you do this, you will typically get the loan funds within minutes. In the past, it would have taken days or even weeks, but because of the advancements in the finance industry, approved loans are credited instantaneously.
Also, repayments are mostly automated at the agreed time so be sure to have enough funds to cover payments at the agreed time. This is to ensure a good credit score and to prevent being penalised.
- As earlier stated, it is very normal for some loan companies to have a processing fee that is deducted from the loan amount. So make sure to read the terms of the loan agreement to avoid hidden fees.
- It is not advisable to take the very first offer you see. Scheming through several lenders and loan types before applying can help you avoid an impact on your credit.
- Considering online lenders may serve to speed up your loan application as most of them have a prequalification process one can undergo without a hard credit check.
- Lastly, before taking a loan, be sure to do your own due diligence to be sure you are not falling into the hands of scammers or loan sharks.