Lenders consider several factors when evaluating your loan application, including:
- Credit score: A high credit score indicates responsible credit management and increases your chances of approval and securing a favorable interest rate.
- Debt-to-income ratio (DTI): This compares your monthly debt payments to your gross income. A lower DTI ratio improves your borrowing power.
- Employment history: Stable employment demonstrates your ability to repay the loan.
- Income level: Sufficient income ensures you can comfortably manage the loan payments.
- Collateral (for secured loans): Assets pledged as security for the loan (e.g., car for auto loan, house for home equity loan) can improve your chances of approval.
