Do you want additional funds to fulfil your pending needs and desires? Borrowing money is not at all difficult but borrowing for the right reason can increase the possibility of the instant loan approval. It is essential to be prepared to answer some of the important questions to the lender to apply for additional financial help. Also, it is important to be honest and straightforward with your answers.
The purpose of the loan and the amount of money needed should be answered clearly to avoid any trouble in the loan application. While lending additional funds to the borrowers, the lender needs to know the purpose of the loan and also interested in knowing the five Cs to determine the credit worthiness of the applicant. The five C’s are as follows:
Character- Character signifies the applicant’s reputation in the personal as well as professional environment. It is required to know the person’s character that can either be good or bad.
Capacity- Capacity indicates the ability of the applicant to repay back the loan amount. Debt to income ratio helps you to measure the capacity of the individual.
Capital- Capital of an individual can be analyzed by the lender. Capital shows the borrower’s ability to invest. It is true that not all the applicant is capable enough to make investments.
Collateral- Securing collateral against the borrowed amount gives assurance of timely repayment of the loan amount to the lender. The lender wants something to put as a security while lending a large amount of loan money.
Condition- it is important to know the current financial condition of the applicant to judge his/her repayment ability. If the borrower is working in a reputed and large organization with a good amount of monthly income, it may prove as useful while lending a loan for the lenders.
Besides knowing all the five C”s, knowing the purpose of loan are also essential important while lending a loan. Revealing or not revealing the purpose of loan to the lender may let you face the following things while applying for a loan:
The interest rate of loan may vary depending upon the purpose of the loan:
Determining the interest rate of the loan for a particular individual is quite a mystery. Else than the credit scores and type of collateral, the interest rate of the loan may vary with the actual purpose of the loan. Stating the genuine and troublesome financial situation will help the borrower to get the loan deal at slightly lower rates. Sometimes, lender understands the financial situation and allows the desperate borrower to grab the additional funds with low rates.
Lying about the purpose of loan generally considered as fraud:
If the borrower hide or lie about the purpose of the loan to the lender and the lender gets to know the truth anyhow, his/her loan application may consider as a fraud. It is effective guide to be genuine and straightforward while stating the purpose of the loan.
Purpose of loan determines the tenure of the loan:
While lending the loan, it is the purpose of the loan amount which helps the lender decides the tenure of the loan deal. For example, if the purpose of loan is stated as going on holidays or Christmas celebrations, the lender will not lend you the money for more than a year or duration. It is every year occasions, so the loan amount should be cleared within a year.
It is not restricted on the borrower that he/she should reveal the purpose of loan for applying additional funds. It is required just to give an idea to the lender to let him choose the best terms for the every borrower according to his/her situation.Click and Get more info. Same Day Loans For Disabled