Lenders typically consider various factors before approving a loan application. By focusing on building a good credit score, reducing debt, improving your debt-to-income ratio, and providing accurate documentation, you can enhance your eligibility for loan approval.
Banks often look at your personal ability to pay back your debt and whether your accounts are in good standing e.g. payments made on time. It is best to have debt in the form of opening an account to improve your credit score so you don't appear as a lending risk to lenders.
How long it takes to get a personal loan depends on the type of lender, but it usually ranges from the same day up to five business days. Online lenders are usually fastest for approval and funding the loan. Having your documents, checking your credit score and comparing multiple lenders could all speed up the process.
Your lender's approval process
Some lenders take a little longer to review your materials and process your application. They may also take longer to approve larger loan amounts. In many cases, the type of lender you use can also impact your approval timeline.
Mobile App. You can download the app of your bank or your lender (if available) to track your loan status. Just log in with your credentials and submit your application ID to know the status at your fingertips. The main reason behind tracking your loan status is to know if your loan will get approved.
Within 30 days of receiving a completed application from a consumer, your bank should notify you, in writing, of its action—and either the reasons for that action or instructions on how to request a statement of the specific reasons for that action—on your application.
Simply, if you're preapproved for a mortgage there is still a possibility you could be denied after. In fact, approximately 5,741 VA loans were preapproved but not accepted according to 2022 HMDA data.
How long does a loan approval take? If you have correctly submitted all your information, the loan application takes takes 24-48 hours.
A mortgage underwriter is the person that approves or denies your loan application. Let's discuss what underwriters look for in the loan approval process. In considering your application, they look at a variety of factors, including your credit history, income and any outstanding debts.
If you apply online, you may receive a decision within minutes. Most lenders send the funds to your account within one to three business days of approval. Your financial institution must also process the deposit before you gain access to it, however, which may also take several days.
Approved. Application is approved and ready to close. Documents are in the process of being finalized or have been sent for signature(s).
You can check the status of your loan disbursement through your lender's online portal, mobile app, or by contacting customer service. Many banks also provide SMS and email updates to keep you informed about the disbursement process. You can also inquire using a transaction reference number.
Too much monthly debt relative to your income—your debt-to-income ratio (DTI)—can lead to a lender rejecting your loan application. Low income and an unstable employment history can also prevent you from getting approved for a personal loan.
Hardship personal loans are a type of personal loan intended to help borrowers overcome financial difficulties such as job loss, medical emergencies, or home repairs. Hardship personal loan programs are often offered by small banks and credit unions.
Clear-to-close buyers aren't usually denied after their loan is approved and they've signed the Closing Disclosure. But there are circumstances when a lender may decline an applicant at this stage. These rejections are usually caused by drastic changes to your financial situation.
Most banks have a dedicated section on their website where you can track your loan application status. Simply log in to your account using your credentials, go to the loan section, and click on the 'Track Application Status' link to check the status.
Payday loans are short-term loans that are typically $500 or less and are designed to be paid back by your next pay period. Most payday lenders don't check your credit, so these are among the easiest loans to get approved for. However, don't let that sway you.
HDFC Bank customers can get Personal Loans with minimal or no documentation. In fact, if they are pre- approved for a Personal Loan, they can easily apply for it.
Gather Your Documentation
To streamline the loan approval process, prepare the necessary documents before applying. Typically, you'll need: Proof of income: Include pay stubs, tax returns, or any other documentation proving consistent income. Credit history: Bring a personal copy can and review your status beforehand.