With finances in South Africa in such a complicated state, 16 million loans might be eligible for debt intervention this year. While this will certainly be a relief to the many families struggling to pay them back, it doesn’t bode well for people looking for a loan. People looking for short-term loan approval might find that lenders are more skittish than usual.
Whether you’re looking to cover an emergency or just need to get through the rest of the month, a short-term loan could be a windfall. However, if you’re not prepared to add yet another bill to your financial situation, you might find yourself in trouble.
Here are 5 ways to get approved for a short-term loan that’s written in terms that favors you as a lender.
1. Take Your Credit Score To The Gym
Take an honest and sober look at your current credit score. If you don’t like what you see, check out what you can improve on it today. If your score has some negative marks on it or some unpaid bills, take every effort to pay them off as soon as possible.
Taking a look at your credit history is like setting fitness goals. You’ll have to think about your consumer habits, where you’d like to be, and small actionable steps that will get you there. If you don’t take the time to be honest with yourself about your score, you won’t be able to get where you want to be.
The best way to improve your credit score is to go through one by one and fix any negative marks you can. If lenders see that you’ve had trouble paying back banks or insititutions before, they won’t be excited about lending to you. Before you set a meeting with a new lender, pay your last one off or at least get a good payment plan with them.
2. Set Realistic Goals
If you’re looking to buy a house and you’ve never even paid off a credit card successfully, you’ll have a tough time getting the loan you want. You need to set goals for your spending that are within your reach.
If you need to pay off your previous loans, make sure you don’t set a nebulous goal of “paying it all off next month”. That won’t get you where you want to be. You need to pay off your debt and you need to eat, so make sure you know how much you can set aside for each.
The more realistic your goals are, the easier they will be to reach. Once you get into the rhythm of completing realistic goals, you’ll be able to motivate yourself to reach out further with your next one. Take it one step at a time and be patient with yourself.
If you want to get a loan approved, you need to have shown you can live within reasonable means.
3. Look Into Poor Credit Options
Thankfully for people with spotty credit history who need a loan quickly, there are options to allow you to get a loan. If you have a car or a house, you can refinance them or use them as collateral to get a loan that you need. Your previous purchases can help facilitate your next ones.
Be careful if you sign over your car title to a lender, however. Many such lenders have very strict rules and will be within their legal right to seize your car if you miss so much as one payment. They could take your car and sell it overnight, leaving you without your vehicle and worse off than you started.
Poor credit options usually require higher interest rates. Be sure that the loan that you’re applying for is worth the risk. You could end up paying twice what something is worth.
4. Check Out Your Lender
Once you find a lender who is willing to work with you, don’t sign anything. Start doing your research and finding out as much as you can about them.
Run a search online and see what people are saying about them. While all internet comments should be taken with a grain of salt, there’s some truth in every negative comment.
If people found that they’ve lost more than is worth it to you, you might want to stay away. Building your credit and finding a more reputable lender should be a higher priority for you than dealing with whoever will loan you money.
You have to think, if they’re this desperate to loan money to someone with a troubled credit history, what do they hope to get in return?
5. Build A Relationship
Once you’ve been offered a loan from one lender, make sure that you’re on your best debt behavior. You should pay back your loan within the terms laid out as soon as possible. If you can pay off your loan early, you should make every effort to do that.
Lenders communicate with one another. If you’re looking for a larger loan from a lender that offers a better rate than your last lender, they might seek out information from your previous one. If your lender has nothing but good things to say about you, you’re sure to be quickly approved.
If you find a lender who you know took a risk on you before, ask them to take a risk again. If you were a responsible lender and paid them back on time, they’ll likely approve you for a second loan. Relationships are everything in business and finance.
Short-Term Loan Approval is Easy
Getting your short-term loan approval isn’t as hard as it will be to pay it back. However, you must make it a serious priority and make whatever sacrifices are necessary to pay it back once you get one. Your financial future could depend on it.
If you’re struggling to figure out which kind of small loan will suit your needs, check out our guide to find out.