Are you just getting started out on your own? A new graduate or looking for your first full-time job? If so, one thing you’ll have to encounter at one time or another is having to obtain a loan to borrow some money or fund your first home. While it sounds simple enough to walk into a bank or fill out an application online, there is a lot of verification of information involved. While this can be done in just minutes, if the numbers don’t add up, you won’t qualify, and you’ll walk away without the funds you need to move ahead with in life. Some loans are easier to obtain than others, while other lenders have strict credit guidelines to meet. Here is an overview of certain types of loans and what goes into the loan approval process.
Personal Cash Payroll Loan
Obtaining a loan to help pay for life’s emergencies shouldn’t be a huge hassle. If your savings account has dwindled, you need to get your hands on some fast cash. A personal cash or payroll loan is one way to take care of sudden needs by getting an advance on your paycheck. Choosing a payroll advance online loan is one way to get your hands on cash now rather than waiting until payday. It’s simple. Just fill out a short questionnaire and complete the approval process. There is an advantage with this type of loan as opposed to a personal loan through your credit union that often requires some form of collateral to secure the loan.
Installment Loans
Do you need a chunk of cash sooner rather than later? Were you turned down for a personal loan through your bank or credit union? If so, an installment loan may be a good option for you. It’s easy to qualify and credit criteria are not as strict as many traditional lenders. You just have to meet some basic criteria, including:
- Having a valid, active checking account in good standing
- No pending bankruptcy case
- A verifiable address
- Reliable and consistent monthly income
In most cases, you can start the application for an installment loan online in the comfort of your own home. From there you can upload and verify your identity and other documents needed by the lender. An over-the-phone interview is done to discuss any concerns and to go over the terms of the loan. Once verification is complete, you can have your funds within 24 hours. Paying the loan back in affordable installments makes it a great way to obtain fast cash without having to go through a grueling credit check.
Home Mortgage
Unlike a personal loan or installment loan, a mortgage loan requires a lot of verification and you must meet specific credit criteria. There are many types of mortgages, but the main three include:
- Conventional
- Government-funded
- Land contract
Conventional mortgages are offered by most banks and mortgage broker companies. They vary in terms but are generally 15 to 30-year loans with either a fixed or a variable annual percentage rate (APR) Most require at least 10 to 20 percent down and require above average credit. Underwriting a large mortgage loan can take up to 30 days before you get final approval to close.
Government-funded mortgages are loans that are funded partially or in whole by the federal government. There are several different types and many target first time home buyers. If you have good credit and have never owned a home before, you can obtain a home loan for 0 to 5 percent down with a low APR. The loan approval process or underwriting can be time-consuming. This is because the bank or broker must also go through a secondary government underwriting team to gain final approval.
A land contract is a property contract agreement between two or more parties. There is oftentimes no credit check involved, but the terms can be risky. A substantial down payment or balloon payment (where the loan must be paid in full by a specific date) is often required. This may be the only option if you have bad credit or are unable to verify your personal income.
Mortgages shouldn’t be that easy to obtain and are a lot of responsibility. Therefore, make sure you’re financially able to start this investment with a substantial down payment.
Auto Loan
Another type of loan you’ll likely apply for at one point in time is an auto loan. Auto loans vary with their interest rates and length of repayment. Generally, you should have a solid credit score over 650 to even be considered for a decent rate and low payment. The higher your FICO score, the lower your payment will be. There are car dealers that offer in-house financing with fewer credit requirements. They may only require a steady income and no recent bankruptcies in order to approve you for a loan.
If you’re new to having purchasing power or you need to work on your shaky credit history, there are still options available to you. In the meantime, work on improving your credit score to boost your credit rating.