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Do you want to fund a business? Or is there an emergency that you need a personal loan for? Finding a lending institution that will ‘surely’ give you a loan is not easy. Some companies advertise guaranteed approval personal loans, expecting you to take advantage of them for your funding. But, there’s more to these types of loans than you know. Here, we’ll be taking a better look at guaranteed approval personal loans and see if you should be getting them or not.
From the name, you might guess that these are loans that the lender approves for whatever reason you provide – no questions asked, nothing! You get a guarantee that you’ll receive your loan when you need it.
However, this is not true.
You won’t see any legit alternative lenders like Mogo giving out 100% guaranteed approval. What they do is show you steps to follow to get a personal loan. You can only hope to qualify and get the money at due time.
Let’s take a look at why many Canadians want guaranteed approval.
The main reason why anyone wants guaranteed approval is that they don’t want to show their credit scores.
Some people have low credit scores that make it hard for them to qualify for a good loan. When they qualify for a loan, the interest rates are usually much higher than the others and this could lead to debt.
Others don’t want their credit checked because they’ve had a negative history or don’t even have any credit history, or they’ve applied for too many loans and have failed to secure any within a short period.
All these things could raise suspicion which would prevent the lender from giving them a personal loan.
For this reason, a guaranteed approval personal loan seems like the only choice.
We already mentioned that most good lenders will not offer you a guaranteed loan. There are so many red flags associated with them that you may not spot immediately because you’re too excited about getting the loan.
Here are some of the red flags you may find with such loans:
When getting a loan, the interest rates should be realistic enough that you can pay back the principal with the interest within the agreed period. With guaranteed approval personal loans, you may discover extremely high rates. If you’re in a haste to get a loan, you will take it without knowing what you’re getting yourself into.
One of the laws governing the lending industry in Canada states that no legal lender should use forceful language to persuade you to give your personal information. If you’re feeling uncomfortable with the lender’s approach, it’s best to step away.
Most lenders will check your credit history to see your ability to repay the loan. If a lender promises you guaranteed approval personal loans and doesn’t request to see your credit history, be suspicious.
Hidden fees are called “hidden” because they are hard to spot. So, before you take any loan, read the fine print carefully. If you skip something important, you may get in trouble later on. Apart from the interest rates, check for the origination fees and prepayment penalties.
This is a term that many “scammers” have used to extort people who borrow from them. They tell you that they’re taking a risk by borrowing you some money. So, they have to charge an extra fee – loan insurance, which you will pay in advance to them approving the loan. This is a big red flag.
Whenever taking any loan, you have to go through all the details properly. Lenders usually offer different ways for you to repay your loans. But, you should stay away from lenders who ask for your banking information or full access to your finances in exchange for guaranteed approval.
If you meet a lending organization that seems suspicious and requests access to your finances, don’t provide any information and walk away. Report them to the authorities immediately after so they can deal with it. If you already dropped your information, contact the financial companies and have them changed before anything can be done on them.
With poor credit, you can still get yourself some good personal loans that don’t promise 100% guaranteed approval with no questions asked. All you have to do is increase your chances of getting a loan. Here are ways to go about it:
This is one of the most important criteria lenders check before offering you a loan. With a good credit score, you can easily get loans because lenders believe you’re trustworthy and will pay back at the right time. To improve your credit score:
While some lenders could decide not to check your credit history, they will check your financial profile. This shows your debt and income history. If your debt level is high, no legitimate lender will approve your loans. Pay off all the money you owe and reduce your debt-to-income ratio to less than 30% (max. 40%).
Applying for guarantor loans improves your chances of getting approved for a loan. To do this, you have to find someone with good credit who can take on your loan repayment if you’re unable to repay.
If you’re doing this, ensure that the other party is aware of the implications. If you default and they also cannot pay, it could affect both financial profiles.
If you need cash urgently, you can find an alternative credit lender to give you a loan.
“Bad credit lenders” give loans to people with low credit scores. They usually look at other factors apart from credit scores including income, employment stability, and debt-to-income ratio. If all these are good, you could get a loan fast.
The application process is also easier, as they don’t require as much paperwork as traditional lenders.
They may have slightly higher interest rates, but they have much higher approval rates than banks. Getting loans from bad credit lenders also gives you a chance to build your credit score.
You can’t get a 100% guaranteed approval personal loan without credit checks. Lenders check your credit as part of the application process.
It is possible to get a loan approved within the same day you apply if you find the right lender. But, you have to wait for 1 or 2 days to receive the money. Remember, instant loan approval is not the same thing as a guaranteed loan approval where the lender vows to give you a loan without going through all the necessary checks.
Most times, a bad credit score affects your loan approval. But, this depends on the lender. With private, bad-credit, and alternative lenders, your chances of getting loan approval with a bad credit score are higher than with banks and other prime lenders.
With poor credit, you can get anything between $500 and $35,000 loans. The amount you get depends on what you need, who you apply to, and how well you meet the requirements for approval.
You can ensure approval by meeting most of the lender’s criteria. It is also great to improve your credit and other aspects of your financial profile to give lenders confidence that you can repay the loan.
