Short term loans and the different stages of their application

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Many people at some stage on another decide they need finance and there are many different types of finance on offer such as car finance, short term loans or instalment loans over a typically longer period. Before any finance is taken however it is always very important that a customer asks themselves a few questions like do they definitely need a loan, how much are they looking to borrow and what lender should they choose. A customer may also want to know what sort of stages their application goes through and it is here what I am going to explain about in the article. I am going to focus on three of the main and most important stages during the application procedure that nearly every lender will be sure to carry out.

One of the first stages on any short term loan application would be that the lending company in question would run a credit check against that customer to see if they have a acceptable credit history or one that is too poor to consdier the applicant further. They would need to see if there are any potential risks to lend to the customer so they can determine whether or not their potential customer will repay the debt if they grant the loan. If someone has a acceptable credit score then the chances are they will be given their loan as requested however if it is too poor then their loan application may be declined or the lender, to minimise risk could potentially offer them a lower amount than what they first applied for. Ever though of checking your credit file. Call Credit, Experian and Equifax are the 3 main ones in the UK.

The next really important assement is te affordability check. The lender will probably take into account the information you provided in the application regarding income and expenditure, along with inofrmtaion found out from third parties they have searched. The need to decide whether the repayments on the loan they are proposing are going to be affordable within the customers current budget.  

The final checking stage in the process would be the security check on the customer applying, they have to make sure that they are lending to the actual person who is taking out the loan. This is a way to minimise any potential fraudulent customers that intend to take out this loan in someone elses name. They will do checks against the customers address, date of birth as well as their name and possible employment information. It can also be common that they will use a code to verify that person’s mobile phone information as well. It is here where if deliberate false information is provided then the application will most likely be declined and no loan will look to be issued in the future either. Most people who are approved for loans will need to be in full time employment so it is likely the lending company will look for contact numbers at the place of work given in the application and then they can make contact to see if that person is indeed in employment. There can be times when in order for a loan to be finalised a lending firm can request some documentation to prove some of the information needed such as a driving license or passport for identification or a utility bill for address information. A payslip or a bank statement can also be requested to provide work information if needed. It will here then be up to the customer to supply this information in order for the loan to be progressed further on. People can send in their required documents usually by post, email or via a text message.

Fianlly the lender will advise whether or not they are prepared to lend to the customer. If the application is declined then the customer can move on elsewhere if required however, if accepted then  the money will be funded into the bank information they have provided. Most applications are now completed on-line and the decision is made reasonably quickly. A decision may take longer if documents ever need to be provided.