If you own any property that can be used as collateral.If you have a history of being late with loan payments.If you have other loans that you’re still paying off.If you are applying on a loan alone or co-signing with a person carrying a good or bad credit score.This means looking at several factors, such as: If they lend you a million dollars, they’ll want to be assured that they’ll get their money and interest back. However, banks need to thoroughly screen the people they lend money to. So, a million dollars 20 years from now costs less than a million dollars you can have in your pocket right now, and the interest banks collect pays for that time difference. You have a job that pays well, but on your own, it may take you decades to save the money – and by then, the property would have already cost more than a million dollars. Say that you need a million dollars to buy a home. The way banks profit from loans is that it gives you the money you need, but when you pay it back, you also pay an extra fee called interest. How Loan and Credit Card Applications Workīanks don’t just give out money to anyone. So, if you’ve been told that you’ve been approved in principle and are expecting an immediate payout or are still wondering why you didn’t get the money you thought you would, read on to understand the legal term (and kind of a marketing term, too) and what steps to take to get out of the pre-approval stage. It’s not only just a legal term it’s also a marketing strategy and a disclaimer that, while you are qualified for a loan, there’s no guarantee you’ll be getting it. This is a pretty common scenario, especially when a lot of people overlook the phrase “approval in principle” or something similar and assume it means they’re already approved for a deal. But after you get there, you leave empty-handed despite thinking you were going to walk out with the money you need. Over the phone or prior to arrival, a banker informed you that you were approved in principle or pre-approved. Let’s say you’re in a bank applying for a home loan, a credit card, or any type of financial deal.
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