In most countries of the world, a person is considered an adult once they reach 18 years of age. However, when it comes to financial matters, many banks and financial institutions are wary of dealing with 18-year-olds. Some banks even extend this to as far as 25 years old.
So what happens if a 20-year-old is the breadwinner of the family and has dependents? What if they are in dire need of financing for a business venture? Or what if a health situation comes up that needs urgent funding or some huge sums that the young adult cannot provide?
These questions and more we will seek to answer these by offering tips on how a 20-year-old can access a credit facility.
Types of Loans that a 20-Year-Old Can Apply For
The most common loans that a number of banks are willing to give young adults are unsecured loans. These are credits that are not backed by any collateral; this means that a young adult is less likely to get a mortgage or a car loan. As we all know, a mortgage or auto loan requires that the applicant have at least 15% for the down payment and an income that can comfortably pay off the loan.
However, credit cards and some consumer loans can be approved based on the applicant’s ability to pay back. Most credit card limit in Norway is between NOK1,000 and NOK 150,000; this provides a leeway for a young adult. Most young adults in their early 20s are allowed a credit card limit of about NOK50,000 (based on their income).
How to Apply For a Loan Without Parent’s Co-signing
Most banks would only give credit facilities to young adults only if the application is co-signed by a parent or guardian. However, a young person may have a viable project but no parent or guardian to co-sign. What will the young person do? Will they forfeit their dream because there’s no one to co-sign?
We believe that there are many valid reasons why a youngster may need a substantial sum of money. That is why we will share tips on how to go about getting funding without a co-signatory in this segment.
Bank Considerations
The following are some considerations on the side of the bank as they look at your application:-
Your Appearance
When you walk into a bank or financial institution to discuss a loan, they start to judge you from your appearance. Therefore, one of the most important things to do especially when going physically to discuss a loan is to dress well. Look at the part of a responsible adult so that the loan officer can take you seriously.
You may be tempted to argue that appearance doesn’t matter but no matter what you believe, people make judgments based on how they perceive a person.
Your Character
Before you think of applying for a loan, ensure that you have built up credibility in any way that you can. Ensure that you are honest in any financial dealings that you are involved in. This is because the bank would surely carry out a background check on you.
The purpose for Taking Out the Loan
The bank will most surely want to know what you want to use the money for. No financial institution would just give out money without looking into the viability of the purpose. Investments, mortgages, and auto loans are the most viable reasons why banks will give out a loan to a young adult.
Your Payment Plan
Every Financial Institution will look into how you intend to pay back the money. Some will even ask you to state your payment plan so you should have it all thought out.
Do You Have Collateral?
The bank will consider whether you have an asset of value that they can seize if you don’t pay back when it is due. So if they approve a car loan for you, they can rest assured that they will repossess the car if you default.
What Is your Income?
Another strong issue is your income; is it high enough to cover the loan? No lender will want to give out a huge sum to a low-income earner.
How You Should Prepare Before Applying For A Loan
Long-term planning is essential especially if you want to get funding for a major project. We will share some tips on things you should work on before applying for a loan and they are as follows:-
Creditworthiness
It is important that you build up your credit score because lenders look at that before they give out loans, especially unsecured ones. It is usually very difficult to get a loan with very good terms with a bad credit score without a co-signer. Lenders who agree to give applicants with bad credit loans usually do so at a very high-interest rate and there is a low limit to the amount that will be approved.
Income
Bearing in mind that the bank will be looking at your income, it wouldn’t be a bad idea if you start doing some jobs that will boost your income. The higher your income the more favorable terms you will get. Note that we are talking about loans for major projects and not just personal loans such as payday loans.
Shop Around
Start to look around even way before you are ready to take out the loan. As we all know, there are traditional banks and online financial institutions that you can approach.
When you take out time to research them all, you will be able to find out which ones are reputable and which ones are scams. Look at the legitimacy of the company, its terms and conditions, and its track record. All these will ensure that you don’t fall victim to fraud.
Conclusion
As we said earlier it is difficult for a 20-year-old to get a loan without a co-signer but it is not impossible. One way that you make the process easier is by using an agent. To find out why you may need an agent as well as other relevant information, you can check out this site: billigsteforbrukslån.com/forbrukslån-20-år
Finally, if you decide not to work with an agent, we have shared some tips to get you started. You can still go further in research for more resources that will help you get the best terms for the credit facility that you want.
