It’s time to borrow money for a new car, or even a house. But do you qualify for a loan? Before you head to the lender’s office to fill out an application, you should know what lenders are looking for in a borrower.
A Solid Your Credit History
The first thing a private loan company in Singapore will look at is whether or not you are a good risk for a loan. This entails running a credit check and seeing how you have handled debt in the past. A solid credit score is vital to containing a loan of any size.
The Ability to Repay the Loan
Lenders look at more than how much you make to figure out whether you can repay a loan. They also consider:
- Your overall expenses: can you comfortably handle your bills each month?
- Your debt ratio: do you have too much debt?
- Your job security: have you been at your current job for at least two years? Is your job safe?
- Your savings: do you have the ability to make your payments for a few months in the event of an emergency?
Home and auto loans always require the borrower to put up the deed or title as collateral for the loan. That way, if you fail to make your payments, the lender can repossess the item purchased with the loan monies.
Outside factors That Could Affect Your Ability to Repay the Loan
There are a lot of things that could affect your ability to repay a loan: a job loss; illness; salary change; even the birth of a new child. While you probably have little control over these outside factors, some lenders consider them when assessing a loan application.
When asking a lender to borrow money for a large purchase, be prepared to answer a lot of personal questions to determine your eligibility for the loan. To ensure success, be vigilant about paying your bills on time (every month); paying off as much debt as you can; and establishing an emergency fund. All of these things will show the lender that you are a responsible borrower.