How to get a $50,000 personal loan and ways to improve your chances
- $50,000 is a lot of money to borrow, so it can be challenging to get approved.
In this video, I am going to talk about how a lender will evaluate your application. And I will also talk about things you can do to strengthen you application to improve the chances of getting the money you need.
And we know something about lending.
We’ve spent years in the lending industry and we currently track hundreds of lenders, banks, credit unions, and credit cards. We have studied the financial situation of hundreds of thousands of Americans. So, we understand both sides of the issue. Let’s get at it.
Every lender has their own algorithm for determining who to approve, how much to offer, and at what rate.
A lender considers that algorithm part of their proprietary technology, so they don’t publish what their approval criteria is. It might be impossible to know how each lender weights the aspects of your financial life, but they do look at the same things, especially when it comes to this amount of money.
They will look at your credit score, but mostly they are looking at your credit history that can be found in your credit report. Most big lenders are essentially creating their own scores based on your data. They look at your recent payment history, your debt levels, your revolving credit utilization, recent hard inquiries, and types of credit.
What can you do?
When you are preparing to apply for a loan of this size, you can try and drive down the utilization on your credit cards. Also, make sure you are not late on any payments for at least 4 to 6 months.
Lenders will also look at your debt-to-income ratio.
Your DTI is represented as a percent and it is calculated by dividing your total monthly debt payments by your gross monthly income. Banks and credit unions are looking for a DTI below 35%. Online lenders are usually a little more lenient and are often willing to go to 45%. It is not unusual for the lender to also calculate what your DTI would be with the new loan payment included. They don’t want to overwhelm your income with a monthly loan payment that you can’t sustain. That’s not good for you and it increases the chances of you defaulting on the loan…which is not good for them.
What can you do?
Since debt-to-income ratios are calculated on your monthly payment (not the actual debt level) making extra payments to your mortgage, car payment, or other loans won’t actually improve your ratio. You can improve things a bit by making extra principal payments to your credit cards, since your outstanding balance impacts your monthly payment. The best way to dramatically drop your DTI is to pay off one of your debts or consolidate your loans.
Next, a lender will look at your income and employment stability.
Again, here the banks are likely to be more stringent in how they evaluate your situation than an online or FinTech lender would be. They want to make sure that your income is reliable enough to support the new loan payment. That means it could be a little harder to get approved if you are self-employed or you recently changed jobs and your employment history doesn’t look consistent. In order to evaluate your income, they may ask for pay stubs, tax returns, or even access to your bank data.
What can you do?
If you have a variable income, you might need to gather more data to show consistent income. The lender might even want to see last year’s tax filings to give them a wider perspective on your situation.
The purpose of the loan could affect the application.
For instance, if you are seeking to consolidate debt, the new loan won’t make your debt-to-income ratio worse. In fact, it should improve it. The new loan will replace other debts and not stack on top of them. Another example could be borrowing the money for home improvement projects. A home improvement project should improve the value of your home which could strengthen your long-term financial situation. You might also consider taking out a HELOC or a HeLoan, which should be easier to be approved for.
What can you do?
If you have high-interest debts, consider combining your current need with debt consolidation. You could consolidate the expensive loans and borrow extra money. This could actually improve your financial situation and allow you to accomplish what you are trying to do right now.
There are three ways in which you can increase your chances of being approved for a loan of this size.
The first is putting up collateral. Some lenders will allow you to secure your loan with the title to your motor vehicle, the equity in your home, or even a savings or money market account. Collateral usually makes it easier to get approved, get a higher loan amount, and score a lower interest rate. But, the obvious downside is that you can lose the collateral if you have difficulty paying off the loan. The benefit of unsecured loans is that you can’t lose any of your assets if you run into financial trouble.
The second way you can improve your chances of being approved is by adding a co-signer. A co-signer is someone who agrees to pay off the loan if you fail to. They really only help your application if they have a strong financial profile, better credit score, or higher income. Not all lenders will accept a co-signer on a personal loan, so if you feel like you need to add a co-signer, you will want to find the lenders that will.
The third way you can improve your chances of being approved is by picking a lender you have used before. If you have had a positive, long-standing relationship with a bank or credit union, you may want to start with them, even if you haven’t borrowed money from them in the past. Some institutions will only lend this much money to current customers.
The single most important thing you can do to get the best offer in your situation is to shop around.
Remember, all of the lenders have different approval criteria. You might be denied by one lender only to be given a great offer from another. **The other reason it’s so important to shop around is that not every lender will lend as much as $50,000. And the ones that will won’t necessarily be willing to give _you_ that much money. If you don’t fall perfectly into their version of an ideal customer, they might be willing to give you a loan, just as much as you need . Looking around can be really important to giving yourself the best chance of getting the money you need.
At The Yukon Project, we’ve tried to make shopping around easy.
If you visit our marketplace page, you can filter for the purpose of your loan, the amount you are looking for, and your credit score. When you apply to one of our featured lenders, we will check your rate with up to 40 other lenders behind the scenes. Our partners use a soft credit check, so applying won’t hurt your credit score. We will show you all of your approved offers so you can pick the loan that would be best for you.
Good luck. We hope you get the best offer. If you have any questions, leave a comment below and we will see if we can get it answered for you. If you found this information useful, please like this video and subscribe to our channel. Your support helps us out and we appreciate it.
