Applying for a personal loan is relatively easy these days, with the proliferation of lending companies that do their business online. But, how long does it usually take for one’s credit application to be approved? The answer depends on the type of lender one is dealing with.
Traditional lenders, like banks, usually require applicants to fill out and submit a lot of paperwork. Aside from accomplishing forms, prospective borrowers also have to present proof of their income by attaching their latest payslip or their income tax returns. Once the documentary requirements have been dispensed with, banks will need 15 to 30 days to process the application. During the processing period, they also conduct background checks to ensure that the applicant has the capacity to repay the loan.
The processing time might be a bit faster for bank clients who have taken out loans from the same bank before. Those with an established credit history will not be required to submit as many requirements as those who are borrowing for the first time, nor will they have to wait as long for their application to be approved. However, if they have borrowed before and they were delinquent in paying their monthly amortizations, the bank would surely hesitate to extend credit again and their application would most likely be denied.
Those with bad credit history are not completely hopeless, though, because they can still get some financial assistance from relatives and personal acquaintances. The advantage with this option is that they can easily obtain credit without having to go through the rigorous checks that most borrowers have to pass. Consequently, they should be able to get their much-needed funds in a few days or, at most, a week.
As for borrowers who apply for credit online, there are some sites that still require prospective clients to fill out their application form with pertinent details, such as the amount to be loaned and the repayment terms, and to submit some proof of income. Other sites may dispense with the second requirement and, instead, instruct their applicants to agree to certain terms and conditions that will legally bind them to comply with their contract. After these formalities are dispensed with, the online lender will process the application and approve it in about 3 to 5 minutes.
Unlike banks which issue checks to successful applicants, online lenders will transfer the funds through internet banking. This minimizes the waiting time, as the transfer can take place in 24 hours or less, depending on the borrower’s internet banking account. It also saves them the hassle of going to the bank and lining up just to claim and cash their check.
Regardless of where one avails of loans, one must remember that there is never a guarantee that one’s application will be approved. Because of the major debt crisis that rocked the economy in the past 5 years, the government has tightened credit policies and financial institutions have had to follow suit or risk getting swept away by the tide of bankruptcy. If one’s application gets declined, it never hurts to prepare more and try again.