5 Tips for A Higher Approval Rate on Your Personal Loan

If you’re considering applying for a personal loan, securing approval may seem like a challenge. But fear not! Here are five simple strategies to enhance your chances of personal loan approval, and borrowing wisely. But rest assured! Here are five tips to improve your chances of personal loan approval so you can borrow responsibly.

1. Check Your Budget

Before you apply for a loan, take a good look at your finances. Check how much of your money you’ll have to set aside to pay off your loan. Lenders prefer it when applicants have enough money to pay off their debt comfortably. Here are some items to keep in mind:

  • Calculate Your Income: Consider your salary, any sidelines, or other sources of money.
  • Add Up Your Monthly Dues: Include things like credit card payments, bills payment, other existing loans, and any other outstanding balances.
  • Keep the Ratio Reasonable: Ideally, what you owe each month should be less than 40% of what you earn. If it’s higher, consider paying down some debts before applying for a new loan.

2. Find the Right Lender

Don’t rush into borrowing. Take some time to find a reliable lender, and explore different loan options. Look at things like the lender’s trustworthiness, loan interest rates (how much extra you’ll pay), fees (extra charges), and how long you have to pay it back. 

  • Reputable Lenders: Borrowing from a legit and formal lender safeguards your personal data, shields you from unreasonable interest rates, and protects you from aggressive debt collection. Look for lenders that are registered with the Securities and Exchange Commission (SEC), and supervised by the Bangko Sentral ng Pilipinas (BSP), to make sure you’re borrowing from a credible lender.
  • Interest Rates: Formal lenders have lower interest rates than 5-6, loan sharks, or informal lenders. A high interest rate means you’ll pay more over time, so make sure you’re taking a look at how much more you’ll have to pay on top of the money you borrowed.
  • Fees: Some lenders charge certain fees for processing your loan, such as processing fees, notarial fees, late payment fees, and pre-termination processing fees. Make sure you’ve verified with your lender all the fees you might have to pay, and how it will be paid for. For your security, reputable lenders like SB Finance do not require any cash payments for loan applications. Instead, any applicable fees are deducted from the loan amount credited to the customer’s account.
  • Repayment Period: Most lenders have a maximum repayment period, usually up to 36 months. Longer periods mean smaller monthly payments, but more overall interest. This states how long you have to pay off your loan, so make sure you’re comfortable with your chosen monthly repayment schedule. 

3. Have a Clear Plan for Your Loan Purpose

Purposeful borrowing or having a clear and good reason for your loan is important to avoid overborrowing. This can help you borrow wisely, and possibly turn your loan into a good debt that will eventually help you earn.

  • Identify Your Goal: What’s the loan for? Whether it’s paying for school, upgrading or repairing your home, expanding your business, consolidating debt, or covering unexpected expenses, being specific will help you borrow wisely.
  • Estimate the Cost: Figure out how much money you need so you can avoid borrowing more than necessary.
  • Set a Timeline: When do you want to achieve your goal? This helps determine your loan term. Align your payment schedule with the lifespan of your loan purpose. For instance, for long-term investments like home improvements, a lengthier payment term may be suitable, while for items with a shorter utility span like gadgets lasting two years (24 months), a shorter payment term is more practical.

4. Pay Your Bills on Time, Every Time

Paying your bills when they’re due might sound basic, but it’s super important. Not only does it keep things running smoothly, but it also shows lenders you’re responsible with your money. Late payments can hurt your credit score, making it harder to get approved for future loans or related transactions. Set reminders or automate payments to stay on track.

5. Be Honest About Your Finances

When you’re filling out the loan application, be honest about your financial situation. Lying can get you into trouble later on, so it’s best to be upfront from the start. Here’s what to include:

  • Income: Provide accurate details about your earnings.
  • Expenses: List all your regular expenses, including rent, utilities, groceries, and other bills.
  • Debts: Mention any existing loans or credit card balances.

While these Personal Loan tips may be simple, following them can help increase your chances of getting your personal loan approved.

Remember, borrowing money can be a useful tool when used wisely, so make sure you have a clear plan before you apply! 

If you need help with your loan application, reach us via email (zuki@sbfinance.com.ph), our Customer Service hotline at (+632) 8887-9188, or our Facebook Page (@SBFinancePH).If you want an SB Finance Goal Consultant to guide you toward achieving your financial goal, simply answer this form, and we’ll be sure to reach out to you!

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