Being rejected often feels personal, but it isn’t always so. For example, roughly a tenth of mortgage applications are rejected, and around a quarter of mortgage refinance requests are rejected. We don’t have the same data on rejections for installment loans, because lenders who offer installment loans online don’t have to report these figures. Here are a few tips to prevent rejection on your next installment loan application.
Know the Minimum Requirements before Applying for Installment Loans Online
A surprising number of loan applications are rejected because the unqualified apply. This is often because they don’t read the terms, conditions and minimum requirements. When you apply for installment loans online, the lender may reject you because you don’t live in their service area. If you live in another state or province, they may be forced to reject your application. If you apply when your credit score is below their minimum threshold, you’ll be rejected. If they limit liability by saying you must be at least 21 to apply, you’ll be rejected. If you don’t have a high enough income or have income from sources they don’t accept, you’ll be rejected. For example, child support and government benefits are generally not accepted income sources for installment loans, because creditors are rarely allowed to garnish these income sources if you fail to pay back the loan. If you don’t have a pre-existing bank account, most of them won’t do business with you. It is too dangerous to deposit funds to a prepaid debit card.
You can reduce the risk of this happening by going through a portal that shops your installment loan application with a variety of lenders. For this, we’d recommend Personal Money Network’s installment loan site.
Verify It Is a Legitimate Lender
An unfortunate sign of our times is how many scammers throw up a website that looks like an online lender’s website. They collect your personally identifiable information to sell to criminals, and they often drain your bank account, too. Read the reviews of potential lenders before you start filling out the application. If they make amazing promises, if it sounds too good to be true, don’t give them your information. Real installment lenders have minimum income and/or credit score requirements. If they hardly care about your credit, they want additional information about your debt to income ratio so they can vet you as a borrower. Real financial institutions want reasonable documentation, but they won’t charge you fees to process your application or promise ten thousand dollars deposited in your account next day. On the other hand, most installment lenders won’t ask why you need the money or ask you for a lot of highly personal (but not financial) information. For example, they won’t ask for the name and other information about family members unless they’re a verified cosigner. And most installment loans don’t require a cosigner, because it is secured by your income alone. In fact, many of these lenders won’t allow you to have a cosigner.
While you’re at it, compare lenders. Don’t sign up for a lender with an unusually high interest rate or fees. Shop around, because it can really save you money.
Fill Everything Out
Your application could be rejected because you didn’t fill in every field, especially in an online application. If you leave a drop down box necessary to fill in the address or fail to enter personally identifiable information, you’ll be rejected. It doesn’t matter if you meet the employment requirements if you leave out the name of your employer.
You’ll also be rejected if you don’t provide the necessary documentation. This may be copies of your driver’s license, pay stub or other key documents. If you fill out the application perfectly but don’t provide the documentation that backs it up, they’ll reject the application.
A growing number of online lenders fight fraud by requiring you to take a picture of yourself and even a short video. The video lets them perform a liveness test and prove it is a real person behind the computer submitting the application. The AI behind these systems is so advanced they can flag when your sibling or parent tries to get a loan using your ID. Verify that you can do these facial recognition and liveness tests before you invest too much time in the loan application.
Proofread Your Application
We all transpose digits in phone numbers and email addresses. This is an annoyance. If you accidentally transpose digits in your driver’s license number, address or phone number, the application may be flagged as having incorrect information. Misspelling a name or entering a nickname instead of a legal name can cause problems, too. For example, they may reject it rather than risk extending a loan to someone who has stolen another’s ID. If you enter a requested loan amount beyond what they offer or accidentally add another zero at the end of your stated income, it will be rejected automatically by the site’s algorithms. If you choose the wrong state on a drop down box or create other data mismatches, algorithms will automatically reject it, too.
Think About It Before You Submit
Be very careful about taking out an installment loan. Make sure you’ll have the money to repay it, because it can be expensive to renew it or roll it over for another term. Have a plan for how you’ll repay the loan so that you don’t become trapped in a debt spiral. Can you sell items to pay for your unexpected expenses or pay off the loan payment when it comes due? Will you have enough money to pay the loan balance and your upcoming bills with your next pay check? Can you work overtime or start a part time gig to raise enough cash?
When you hit submit, let the website process the application. If you hit submit several times, it may look like someone is spamming the site. Check your email or phone for messages regarding the application status. If nothing happens in a couple of hours, go back to the website that locked up or errored out and try again. Do not apply to several lender websites, unless you want to risk your credit report being flagged for potential fraud.