How Long Until You Get The Money From Your Long Term Loan?

If you are looking to launch a new business or buy a new house, you will automatically need to apply for a long term loam. However, getting approved after applying for a long term loan isn’t always a piece of cake.

Let’s calculate the amount of time until you aquire the money from a long term loan.

What factors are considered for a loan?

Firstly, remember that each kind of long term loan has different lending time scales. Lenders also usually evaluate your eligibility for a loan on the basis of some specific factors. These include:

  • Your credit score and reports
  • The history of your payments
  • Your personal and business cash flow
  • Your annual estimated profit
  • The amount and type of loan you have requested

A typical long term loan in the UK can get approved within a month if you own a very good credit core with a healthy cash flow each month. There are however, two major types of long term loans, secured and unsecured loans. Timelines for both, differ.

For Unsecured Loans

Unsecured loans generally involve lesser risks and can get approved quickly as well. These types of loans can only be taken for a short period of time.

For Secured Loans

In contrast, secured loans allow you to borrow more cash for a longer amount of time (Sometimes even 20 years). This is because they have your Error! Hyperlink reference not valid.NINO, account information along with home/car papers secured and you can lose them if you are a defaulter. Accordingly, the approval for these loans is time consuming with a thorough check of your credit reports as well.

For Student Loans

Student loans are a type of long term loan, where you get approved quicker than the others because in Britain, they are primarily provided by the government. According to The Telegraph, around 610,000 students across England and Wales alone, applied for student finances in 2016.

Alternatives for Quicker Approval

There are different kinds of lenders and each one of them has different regulations for each type of loan they offer. Borrowers who are in a rush can get a long term loan fast through lenders who offer long term loans even on an average credit score but the disadvantage of getting a long term loan with a bad credit is that you are not sure when and how you will be able to pay back, so the risk involved may be alarming.

Generally, clients with a good credit score and cash flow get approved quicker than others. Once the approval has been given, it can take anywhere from 3 to 5 business days to get money into your designated account. This may vary, depending on your lender, so be sure to check the timeframe when you are applying for the loan. Once the money is in your account, you can use it for personal or business purposes as needed without facing any issues.

Why You Should Never Become a Co-Signer?

There are so many benefits involved with having a good credit rating. There is almost nothing in the financial world that you are prohibited from, if your credit ratings are high. However, there are certain things that come with risks you should never ever take. One of these things is co-signing a loan.

Co-signing a Loan

No financial expert would deny how frightening co-signing a loan is. It basically means that you—a person with a good credit rating—sign a loan along with someone who is unable to get one due to their bad credit rating. In simpler terms, you, as a co-signer and a good-credit holder, take the guarantee that if the other person defaults, you will pay back their loans. This means you are the one held accountable for a loan that someone else takes.

Following are some of the major reasons why you should never become a so-signer.

High Risk—Low Return

The worst thing about a being a co-signer is that you risk too much for too little. The only benefit you get of being a co-signer is a slight increase in your already-great credit ratings. On the other hand, the risk of the borrower going bust and requiring you to pay back on his behalf is too high.

You Are Reliable

By being a co-signer, you take all the responsibility over your own shoulders. This means that you are the first person to be sued by the lender in case a borrower defaults. The reason why the lender will pull you in the lawsuit first is because you are the one guaranteeing the borrower’s repayment.

The Negative Dilemma

Another negative aspect of being a co-signer is being on bad terms with the borrower due to a default. Since they already have a bad credit rating, getting another negative mark by stopping the repayments will not make much of a difference to their position. You, on the other hand, will not only have to pay back the entire loan but also risk a fall in your credit ratings.

Loss of Personal Relationships

People usually tend to co-sign for someone close like a friend or a partner. However, since by co-signing a loan, you are the one who are on the hook, you have to make sure that the borrower makes regular payments on time. This is quite stressful as you normally aren’t in a position to force a payment out of the other person, and if you do, it consequently makes your relationship bitter.

Tax Issues

In a case where the borrower defaults, the lender might call for a settlement instead of a lawsuit. This might sound not-as-bad, but it actually is. Consider owing 10,000 pounds, for which you settle on repaying 6,000. You will have to file the remaining 4,000 on tax returns, which will show the settlement as ‘settled’ rather than ‘paid as agreed’. This remark will also pose a negative impact on your credit rating.

You cannot deny the fact that co-signing does not bring you any good, at least in majority of the cases. This is why it is always recommended not to ever become a co-signer.