Are you looking to apply for a loan on a short-term basis and trying to get the very best deal available? You could be looking at the various funding options out there on the short-term finance market, however, with so many options to choose from, this can be no easy feat.
For example, how do you know which loan is the best one to choose, and how is it possible for you as an applicant to get the best loan rate? Answering these questions on your own can be difficult if you have no advice at hand: this is especially the case when you are trying to get access to money fast, whilst also trying to gain access to funds in a cost-efficient manner.
In order to make the decision process easier, our guide looks at the best ways to ensure you get the best deal possible. This also information on the kind of things lenders will be looking at when it comes to criteria in order to decide whether to approve or decline your application.
A good credit score is key to getting a good interest rate
You will find that one of the most important factors that lead you to obtain the best deals for short-term loans is having a strong credit score. This is because unfortunately if you have a bad one, it decreases the chance of you being accepted for a loan. What’s more, even if you are accepted for a short term loan with a bad credit score: you will likely have to pay higher levels of interest.
There are a variety of ways in which you can improve your credit score. Wondering how? Take into consideration the following::
- Make sure you are on the electoral roll
- Regularly check your credit report for inaccuracies
- Close unused credit card accounts
- Make sure you are paying all your bills promptly
- Keep credit card balances low and pay them off in full monthly
For more information, read how to improve your credit score.
Having a stable income
If you are trying to obtain the best interest rates available for short-term loans, you may gain access to some of the best funding options on the loan market providing that you can prove you have a stable income.
A regular form of employment is of paramount importance to almost any lender. This is because it shows that you are a lower level of risk to lend to, as there is a greater likelihood you will be able to make loan repayments.
Paying off outstanding loans
It is well worth taking some time out in order to make sure that any outstanding loans you have on file have been paid off if you want to get the best short-term rates available. Why does this matter? Because with many short-term loan companies, it can end up contributing to the interest rate you receive for a short-term loan.
In the worst-case scenario, it may even have the effect of damaging your ability to be approved for a loan entirely, as having a number of outstanding loans already on your credit report (which lenders will be looking at to assess your loan eligibility) can be seen negatively: it may suggest an inability to manage money in a sensible manner.
No recent defaults on file
Another factor that can impact your ability to get the best short-term rate available is if you are considered a potential risk to a lender. This may happen if they find out that you have recently defaulted on a number of payments for loans or credit cards you have.
This can have a number of disadvantages: It may mean you do not get accepted for a loan, as they may doubt the likelihood of you being able to pay back the loan fully. As a result, you might have to look at other funding options, such as getting a guarantor for a loan or using some form of security or collateral (car, home) to be approved.