Do All Financial Lenders Come With Roadblocks?

Many of us will need financial help so that we can progress – with some of the most common loans being mortgage, personal, and auto loans – but have you ever thought about which lender would suit you best? Choosing a lender can be a stressful time, especially if your credit history is not the best, but there are ways that you can improve your chances of being approved for a loan, even if you’re faced with a few stumbling blocks along the way. So, whether you’re looking for a payday loan direct lender or a bank loan, there is an option to suit you. Below, we’ll look at the most common types of lenders, and how to avoid pitfalls in the application process.

Types of financial lenders

Throughout the course of your lifetime, there may come a time when you need additional financial help from a lender. This could be for several reasons, whether you need a mortgage to buy a house, a loan to deal with an emergency expense or a loan to start a business. No matter what you need the funds for, finding the right lender for you can be difficult, and dealing with them can seem even harder. But there are ways of accessing additional funds without coming up against roadblocks with every application. Some of the most common types of lenders you may find when applying for loans are:

  • Traditional lenders: The most traditional type of lender is your bank, along with credit unions and other financial institutions.They have some of the best terms when it comes to loans – they can offer varying amounts, as well as competitive interest rates. However, they are strict, and some of us may not meet the criteria they set out for borrowing.
  • Alternative lenders: These lenders are more relaxed. They can lend money to a range of people with a range of histories as they are not governed to the same strict level as traditional lenders. These alternative lenders may be based online, in the form of crowdfunding or peer-to-peer lending.

How to avoid common issues

As we’ve discussed, traditional lenders tend to be more difficult when it comes to being approved, as your finances must meet strict requirements before you can benefit, which is great if your credit history is up to scratch, but what if it’s not? This is where alternative lenders can help. Whilst traditional lenders may see you struggling to be approved, alternative, online lenders come with flexible conditions that can help a range of people with various backgrounds. Here are a few tips to help you through the roadblocks that may come up during the application process.

Build your credit score

When applying for finance, one of the most important elements is your credit score. The higher your score, the more likely you are to be approved for your chosen loan amount. If you are applying for a loan and your credit score is not up to scratch, you should work on improving it before you apply. You could also apply to alternative lenders that base their decisions more on affordability.

Complete your application correctly

Traditional lenders tend to come with a longer application process, this is because they have stricter regulations to follow. Even if you choose to apply for finance with an alternative, online lender, the application may not be as long, but you will need to make sure you complete it to the best of your ability. This means a decision can be made more quickly, so you can benefit from a loan when you need it most.

Bad credit history

Your credit history plays an important role in whether your lender approves your application. If you have had a hard time repaying loans in the past, you might find that traditional lenders are reluctant to approve your application. Alternative lenders may be a better option – you may need to show them that you can afford to pay the loan first with bank statements and employment details.

Affordability

There are a few documents that you will need to help your lender decide whether they can lend to you. If you have bad credit history, an alternative lender will ask you to provide proof of income and bank statements dating back a few months so that they can ensure you can afford to pay back the amount you’re applying for. Affordability means that lenders can base their approval on whether you can afford the repayments, rather than basing it on how you have paid back finance in the past.

Huynh Nguyen

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