Even the most financially responsible New Zealand residents sometimes need to borrow emergency cash. Medical bills, household repairs, and vehicle breakdowns may create expenses that drain your savings account. In many cases, a personal loan can help. It is a popular option offered by a variety of businesses. Each business has its own approval process and it is easier to qualify for some than others. However, there are steps you can take to improve your chances of getting the funds you need.

1. Understand Lenders’ Credit Requirements

Your credit standing is the most important factor for many lenders. Each company has its own minimum requirements. Conservative lenders like banks often want higher scores than loan companies. Lenders research your credit background to determine whether you manage your money responsibly will be able to repay your loan. The amount you owe affects your credit since large debts impact credit scores. However, some lenders will approve a new loan even if you have several outstanding debts because not all borrowing has a negative impact. An article at Forbes.com explains how a loan may actually improve your standing.

2. Make Sure You Meet Employment Conditions

Most lenders expect customers to verify employment, but requirements can vary. Many businesses accept nearly any verifiable income source while others reject child support, freelance income, or benefits.

3. Find Out Whether Your Loan Purpose Will Be Approved

Many companies loan money without asking clients what it will be used for. Others prohibit clients from using funds for things like business expenses or secondary education. It is wise to find out lenders’ policies before applying.

4. Understand All Income Requirements

Your income may be the single most important factor in determining whether you get emergency cash. Every lender has a minimum requirement and some businesses focus primarily on income. Many companies also factor in how much debt you have compared to your income. This is known as the debt to income ratio and the percentage required for approval can vary from lender to lender. For instance, New Zealand lender GE Money considers a 36% debt to income ratio good.

5. Determine Whether Collateral Is Required

Depending on the amount of money you need, a lender may ask for collateral. It is rare for companies making small personal loans have this requirement. Those that make larger loans typically want to defray their risk. They usually require collateral like property or liquid assets.

6. Consider a Variety of Lenders

Your current financial situation will determine what type of lender is most likely to approve your application. Banks are usually the best option for those who are employed, have healthy incomes, and enjoy good credit ratings. Clients with financial difficulties will be more successful in getting a personal loan from lenders that do not check credit and have more relaxed requirements.

7. Check the Details Before Applying

It might seem obvious, but you need to double check the details of your application before submitting it. A small error can disqualify you unnecessarily.

New Zealand residents who need emergency cash can get personal loans from a variety of lenders. They have a good chance of approval if they meet lenders’ requirements for credit, employment, income, collateral, and borrowing purpose. It is also important for applications to be correct, to avoid unnecessary rejections caused by errors.