Your Lender Should Be Offering You These 7 Things

Applying for a loan? There’s a lot to read in the small-print but it’s well worth doing because not all loans are equal! What makes a suitable loan can be much more than the interest rate. Here are seven things that your lender should be offering you.


1. Your application shouldn’t leave a record on your credit score.

When you apply for any type of loan or other financial product, your credit history is normally checked to make sure you are a good borrower. Bad borrowers result in loss for the lender. But many lenders use a credit checking process that leaves a permanent imprint on your credit history. The risk with that is if your lender rejects your application because of a problem with your credit history, the rejection is recorded on your credit file. And then any further applications are likely to be rejected because of this blot on your record!

Not all lenders do this. Some lenders understand that a bad mark on your credit history only makes it worse for people who are financially vulnerable, so they use a different method known as a ‘soft search’ (or sometimes these are referred to as a ‘smart search’). If for some reason your application is rejected, it won’t appear on your credit history and you’ll then be able to approach a different lender, applying different acceptance criteria, without any additional worry.


2. A free application

Believe it or not, some companies actually charge for a loan application. The reason for that is that an application does cost the lender money to process (no matter if the loan is taken up or rejected), so these lenders pass that cost on to consumers. The obvious problem is that if your loan application is rejected, you’re out of pocket with nothing to show for it.


3. A quick decision

Most people need a loan because something unexpected has happened and an urgent solution is required. Because of that, a very important consideration should be the time the lender takes to make their decision. Make sure your lender offers a quick conditional decision – same day is good, but in a few minutes is ideal – because if you’re rejected than you can get on and find another lender. Be wary of lenders who don’t publish their decision time frames – you may be kept waiting!


4. Concise and readable terms and conditions

It’s not unreasonable to expect the terms and conditions and the application form to be easy to read and only as long as they need to be. If you can’t read it or understand it, how can you know that the loan is suitable for you, and that you can meet all the requirements to have your application accepted?

If you’re applying for a loan and have received pages and pages of long words that you don’t understand, then you should probably stop right there, and look at the next two items.


5. A telephone number, to speak to a human being

If your lender doesn’t offer you a telephone number to actually speak to someone, then you might want to think again. Many lenders offer an email address to get in touch, but with email you never really know when the lender will respond. Some lenders use online chats to interact with – but often it’s not even a human being on the other end – it’s an AI-based chatbot. If you have a complex problem, speaking to a human being is the only option. Don’t forget, a phone number should be available for you to use after your loan has been accepted.


6. Assistance with completing your application

You may need assistance in completing your application form, particularly if some of the words are not familiar to you. There is no shame in asking for help with your application, and your lender should offer it. If they don’t, then try a different lender.


7. Option to pay off the loan early, without high penalties

Financial circumstances can change for the better, as well as for the worse. So if you come into money that could be used to pay off the balance of the loan, you should have the option to do this without being subject to high early-repayment penalties. Make sure your lender offers this so that you don’t get stuck with a loan that you can’t get out of.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.