Dealing with unexpected expenses can be stressful and challenging.
Expenses such as medical bills, car repairs and home improvement projects can put a strain on your finances and stress you out.
In such instances, applying for a personal loan in Saudi Arabia can be a smart option.
With a personal loan, you can borrow money and use it for any purpose you have in mind. As such, you use it to cover unexpected expenses without draining your savings or maxing out your credit cards.
Also, personal loans typically have fixed interest rates, making it easier for you to budget and plan for the payments.
If you have several credit card balances with high interest rates, a personal loan with a lower borrowing rate can help you save money and pay off your debt faster with fewer hassles.
Lastly, personal loans can help you increase your credit score, particularly if you always pay on time and don’t skip any payments.
Applying for Your First Personal Loan in Saudi Arabia
Experiencing all these benefits begins with going through the personal loan application process in Saudi Arabia.
Below are some tips you can follow to streamline the process and increase your chances of having your first personal loan application approved:
1. Choose the right loan provider.
Saudi Arabia has several lending and financing companies offering different types of loans. You need to research each provider carefully to ensure you get the most out of this service and avoid the hassles of obtaining one.
Look into the loan products offered by lenders, banks and other companies. These providers have different requirements and interest rates, so take the time to compare their offerings and find the best one that fits your needs.
Pay attention to the interest rate, fees and repayment terms as well. Some lenders may charge origination and application fees and prepayment penalties, which can increase the overall cost of your loan.
Because of this, choose a lender that offers competitive interest rates and transparent fees.
2. Check your credit score.
Once you’ve decided to apply for a personal loan, take the time to check your credit score.
The credit score is a crucial factor that lenders use to evaluate your creditworthiness. It indicates your financial history and ability to repay your debts.
Generally, a higher credit score indicates a lower risk for lenders. This can lead to better loan terms and reduced interest rates.
Use an app or website such as Credit Karma or Credit Sesame to see your credit score and report for free.
Your credit report includes valuable information that will affect your loan application. These include your payment history, credit utilization and the number of accounts you have.
Check the report carefully for errors or discrepancies since these can affect your credit score.
If there are mistakes on your report, find out how to correct these to improve your credit score and chances of having your loan application approved.
3. Determine the amount you need to borrow.
If you have a good credit score and meet all the lender’s requirements, you can put a large loan amount on your application, which will likely be approved.
However, you will end up paying higher interest rates and monthly fees when you borrow more money than you need. Because of this, apply only for an amount that you can repay.
To determine the amount you need to borrow, create a detailed budget that includes all your expenses and income. By doing so, you’ll have an idea of how much you can afford to borrow and repay each month.
Remember to include any additional charges or expenses associated with your loan, such as origination and late fees.
4. Prepare your requirements.
You need to submit several requirements and detailed financial information as part of your loan application.
Check your lender’s list of requirements and collect them for submission. In Saudi Arabia, this usually includes a copy of your ID if you are a Saudi national or passport if you are a GCC national or expat, a salary introduction letter and an employment certificate.
Take note of the details listed on these documents since your application form should reflect accurate and consistent information.
Having these documents and information beforehand can help streamline your loan application, prevent delays and increase your chances of getting it approved.
5. Read the loan application form’s fine print carefully.
After completing the loan application form, go over the terms and conditions, which you can find at the end or back of the online or printed document.
This fine print usually includes the loan’s interest rate, fees and payment schedule. If you have any questions or are confused about something, ask the company’s representative for clarification.
Be on the lookout for hidden charges, such as prepayment penalties or late fees on the fine print. If you disagree with them, you may want to look at another lender.
6. Be honest when completing the application form.
When filling out your loan application, always be truthful. Be consistent with the information you provide as well. These include your income, expenses and employment status.
Your lender will verify the details you share with them. As such, they can deny your loan application if you provide false and inaccurate information.
Also, be upfront about missed payments, delinquent accounts and negative marks on your credit report. Avoid trying to hide them; instead, explain the circumstances that may have caused these, such as a job loss or medical emergency.
7. Avoid applying for multiple loans simultaneously.
Applying for several loans at the same time can hurt your credit score and make it more difficult for you to have your application approved.
Lenders check your credit report when you apply for a loan from them. Your credit score will be affected when several companies conduct these hard inquiries.
To avoid this, choose a lender with requirements that you can meet. Also, if you’re not sure you qualify for a loan product, use a loan aggregator website or app that can match you with the best provider based on your credit score and financial needs.
And if your loan application is unsuccessful, wait a few months before applying for another one.
Applying for your first personal loan can be challenging and time-consuming. However, you can breeze through the process and boost your chances of securing the financing you need when you follow these tips.