What Conditions Do You Need to Meet to Apply for Unsecured Personal Loans in Ireland?

Unsecured loans, also called personal loans, refer to those that are required to pay for emergency and planned expenses. They are considered safe as they are not subject to collateral, which means there is no risk of repossession of your house or any other valuable assets. However, this is one of the reasons why qualifying for unsecured loans is challenging.

Although small emergency loans do not require stringent approval criteria, you will still have to meet certain conditions for approbation. Apart from the common criteria, every lender has its own way to check your eligibility. They will assess the risk involved in lending you money. Of course, your chances are slim when they find you a borrower with a high default risk.

Conditions that you should meet to apply for unsecured loans in Ireland

If you are looking to take out unsecured loans in Ireland, you should meet the following conditions:

• Your age and residency
  You must have come of age to apply for unsecured loans. On no account will you be lent money if you are underage. However, some lenders may have stricter requirements. They may require you to be at least 21 years old.
  Additionally, you will have to prove that you are a resident in Ireland. You will need to submit proof of address. If you are a tenant, make sure that you do not switch your address too frequently.
• Income and employment stability
  Approval forunsecured personal loans is highly dependent on your income and employment stability. Lenders would never sign off on your application unless they are given assurance about your repayment capacity. Therefore, it is a must to have a stable income source.
  
  If you are an employee, you must have been working with the same employer for at least one year. However, if you have recently switched, you should not be on probation. Lenders are sceptical about those who keep switching between jobs frequently.
  
  If you are self-employed, you must have been running your business for at least two years and making profits.
  
  You can apply for personal loans even if you are a freelancer, as long as you demonstrate your ability to manage payments. If you are unemployed and you need money urgently, you can consider applying for an unemployed loan, but you will still need to have a passive income source. For instance, you should have a side gig such as babysitting, pet sitting, Uber driving, etc. In the absence of any side gigs, your unemployment benefits will be regarded as your income.
• Your credit history
  In order to apply for an unsecured loan, you must have a decent credit rating. A good credit history is particularly mandatory when you are looking to borrow a large amount of money. It depends on a lender’s policy how much money they could lend you despite a poor credit rating.
  
  Whether you borrow a small amount of money or a large amount of money, your credit score will be checked. Apart from that, a debt-to-income ratio will also be taken into account. An ideal debt-to-income ratio should not be more than 30%. If your debt makes up more than 30% portion of your income, you will most likely be charged high interest rates. If you already have a poor credit score, you will likely be refused.
• Loan purpose
  When you are borrowing a small amount of money, you will not be restricted in the use of the money. You are free to use it for any purpose, whether it is a car repair or a medical bill. However, if you are borrowing a large amount of money, you will have to be specific about your purpose.
  
  Whether you are about to use this money for a home renovation or a vacation. You will have to use it for a specified purpose. Bear in mind that you cannot use unsecured loans for a business purpose.
  Interest rates also depend on the loan purpose. This is why it is vital to clearly mention your purpose. For instance, green loans come with lower interest rates. If you renovate your house by installing solar panels and taking up some energy-efficient projects, you would certainly qualify for lower interest rates.
• Affordability assessment
  Just because you have a stable job, it does not mean you can easily keep up with repayments. Affordability assessment is a must. In order to determine whether or not you can discharge your debt on time, a lender would like to take stock of your expenses.
  • They will check your monthly expenses such as rent, mortgage payments, childcare and other commitments.
  • They would want to know how many members are dependent on you.
  • Additionally, they would like to inquire about existing debts.
    They acquire this information to know whether your budget has enough money to make repayments.
    

Ways to improve your chances of qualifying for unsecured loans

Here are the ways to improve your chances of qualifying for personal loans:

• You should check your credit report. Make sure that it does not consist of erroneous information that lowers your credit points.
• Do research in order to ensure you are not applying to a lender whose criteria you do not match, which results in rejection.
• Pay off your current debts. The lower the amount of existing debt, the better it is.
• Try to borrow less money if money is tight.
• Consider alternatives such as credit unions and banks, too. They might offer you better and more affordable deals.

The final word

Applying for personal loans in Ireland can be a bit challenging. You should have a good credit score. However, if your credit rating is not up to scratch, you should try to offset its impact by improving your income sources.

It is vital to prove your affordability, whether you are borrowing a small amount of money or a large one. As long as you can prove your repayment capacity, you can easily get approval for an unsecured loan.