Tips for Pre-Approved Loans
Wednesday October 14, 2009
Personal loans can offer a great source of financing for many people with loans offered in a variety of sizes and time durations. There are various kinds of personal loans available, with the most common being a choice between secured and unsecured, with different loans also being offered with specific purposes such as military loans and online payday loans.
Yet what of the pre-approved personal loans that are on offer and what do they entail? You may have come across the pre-approved personal loans in the mail when your bank or financial institution has written to you advising that you are qualified for a loan. Pre-approved personal loans are a means of fast tracking the whole personal loans process as the bank has already completed its credit verification process and approved the potential borrower.
Additionally, the lender will have also looked at the potential borrower's monthly income information that they may have on file for other accounts under the borrowers' name.
Pre-approved loans can come in any amount with some being eligible for amounts up to mortgage loans. Additionally, pre-approved loans also give the borrower a good indication of their loan amount limits for mortgage loans and offer a realistic budget outline for when they begin looking at properties what with the amount confirmed by an entitlement certificate. What's more, by having the pre-approved loan entitlement certificate many homebuyers have found that they are given a competitive edge when it comes to getting the property they want.
When talking about pre-approved loans, there are actually three different classifications that can be applied to mortgages and home loans. That is, Pre-Qualification, Pre-Approval and Loan Commitment.
Pre-Approval for mortgages and loans is, as previously discussed, when the lender has already looked over the potential borrowers credit file, credit rating and income to determine their loan limits and whether or not they would be approved for the loan.
Pre-Qualified is when either a lender or estate agent will look into your financial situation and credit rating that should offer a price window of just what you can afford when it comes to loan repayments. Finally Loan Commitment is after the loan has been approved for both the borrower and the chosen property meaning that approval has been given.
To find the right pre-approved loan for you there are a number of steps that you should take that will make the entire process far less stressful and less expensive in the long run. There are four simple steps that you should keep in mind:
- Decide on the right loan
- Choose a lender
- Calculate how much you can afford to borrow
- Put together all the appropriate documents you need
Of course, if you want to be pre-approved for a loan there are steps you can take to improve your chances. Begin by compiling a list of all your assets and debts that any bank or financial institution will take into consideration including all savings, stocks, bonds, car loans, credit cards debt and any other repayments.
Pre-approved loans aren't restricted to home loans but can apply to all kinds of loans with pre-approved car loans being a popular option as they offer greater flexibility and savings, especially in that the borrower will not have to missed out on dealer rebates or the opportunity to take advantage of lower interest rates.
Pre-approved loans can offer many advantages when it's for a specific purpose, such as a new home or car, as it will increase the negotiation power of the borrower, set clear financial parameters and help in planning the best options available. What's more, getting a pre-approved loan doesn't signify as any commitment with the borrower not obligated to take the loan, it is merely the first step in the process. Of course, the pre-approved personal loans that offered by a person's bank can also save time if you are planning to apply for a personal loan, although they should not be accepted simply because the offer was made.
Use PersonalLoans.com.au to compare the best personal loans on the market