Everything You Need to Know When Applying for a Low-Income Loan
If you’re thinking about applying for a low-income loan, the process can be overwhelming, especially if this is your first time filling out a loan application. Different types of credit and loan companies have different requirements, so it can be difficult to know what you need to do when applying for a loan to get the best results.
There are three steps in your loan application process – qualification, approval and payment. What makes Magical Credit different is that our loan process is based on your fixed monthly income; this includes government subsidies and pensions. In order to qualify for a loan with us, you need a fixed monthly income that is deposited directly into your bank account, and should have a good record of paying off any loans you’ve taken in the past. If you’ve done both of these things, it’s extremely likely that you’ll qualify for a low-income loan with us!
Here’s everything you need to know to make applying for a loan as easy as possible.
The Three Steps in the Loan Process
1. Qualifying for a Loan
Depending on the stipulations of your loan company, you will need to determine whether or not you qualify for a cash loan. Some requirements to qualify include: stable income, satisfactory credit score, and current debt payments.
- Stable Income: can mean something different depending on the loan company you are working with. For instance, a loan company may require you have a direct deposit receipt as proof of steady employment from a reputable company. Other companies, like Magical Credit, consider government subsidies as a form of stable income. In order to determine whether or not you qualify for a loan, it’s important to understand what their definition of a stable income includes.
- Your Credit Score: Typically, a credit score that is above 640 means you have a good chance of qualifying for a loan. For scores below 640, with most loan companies, you’re more likely to be denied, or be charged exorbitant interest for the loan. However, at Magical Credit, credit score is not one of the factors that we put a heavy weight on. We frequently accept clients with low credit scores.
- Current Debt Payments: If you currently have debt, more often than not, a loan company will not grant you a loan if your loan payments are over 40% of your income. This requirement gives loan companies peace of mind when lending money because the applicant’s income isn’t going to other debt. Not all companies have this as a requirement for loan application. Make sure to research multiple lending companies and their requirements before deciding on the right loan company for your situation.
Make sure to have your social insurance number, date of birth, information about your source of income, monthly expenses like rent or mortgage payments, assets including bank accounts and vehicles, as well as other liabilities such as car payments, loans, and credit cards ready when applying for a loan. Not all companies require this depth of information, but it’s best to have it ready.
2. Getting Your Loan Application Approved
Depending on the loan company you are dealing with, the loan application approval time can vary from five minutes to a week. The duration of the submission and approval time is not an indication or the quality of loan you are going to receive. Just because a company takes longer to approve your loan does not mean that they are more qualified lender, and vice versa. You should decide on a loan company based on your needs and your situation.
No one enjoys a tedious loan application process, so at Magical, we’ve made our loan application process as straight forward as possible. We have an instant loan application process that lets you know if you’re preapproved or declined based on the information you submit. We process loan applications as swiftly as possible, so you will know within one business day whether your loan has been approved or not.
If you don’t get approved for a loan, it is important to find out from the loan company why you were denied. Once you know what you need to improve, you can work towards making those changes so the next time you apply, you are more likely to be accepted.
3. Receiving Your Cash Loan
Loans typically range from $500 to $20,000 dollars based on what you applied for and what the loan company feels you will be able to pay back. At Magical Credit, we lend between $2,000 and $10,000. Determine how the money will be transferred to you; whether it is direct deposit, check or cash. You will also need to establish how your payment plan will work. Some companies require automatic withdrawals from your account, while others you need to pay in person. Discuss this with a loan company representative before you agree to accept any money.
What Happens After Applying for a Loan: Fulfilling Your Responsibilities
After you are approved for a loan, there are a few responsibilities you should keep in mind.
- Know the amount being borrowed.
Make sure you understand how much you are borrowing and how much you’re repaying.
- Understand the interest rate being charged on your loan.
You should be aware of the interest rate on your loan, so you know the additional costs for each payment.
- Other costs such as service fees or administrative fees.
Some companies may have a fee for the paper work completed or the process. Ask prior to agreeing to the loan what additional payments are required for the loan process.
- The length of your loan agreement.
Before accepting any loan, find out the term of your loan agreement. You should know how long your contract lasts.
- The date you will start being charged interest.
There may be a grace period before you are charged interest, or the loan company may begin charging interest the moment the loan is accepted.
- The amount of your payments and when they are due.
Whether you are paying weekly, bi-weekly or once a month, you need to know when your payments are due in order to uphold your end of the loan agreement. Pick a payment schedule that you know you will be able to stick to, and payments that you will be able to afford based on your income.
- The period of time it will take to pay off the loan.
Depending on the amount of the loan, your income, and the payment periods, you should know how long the loan will take to pay off. Keep in mind you have to pay interest on your loan and that could extend the payment period.If you’re looking to apply for a low-income cash loan, Magical Credit specializes in offering loans to people on government subsidies and pensions. If you think you’d be a good candidate, fill out our application now!