Pre-qualification for a loan is typically as good as it gets.
It should be noted that when a ‘guaranteed’ loan is mentioned, it does not carry an automatic reference to either a student loan, or a government loan. Other loans are liberally advertised as ‘guaranteed’ – if you meet the certain criteria- that is. However, you have to fulfill a very long list of prerequisites, and fit a potentially longer list of different specific parameters in order to qualify for either student or government loan in the first place.
Interestingly enough, both types of loan are currently under fire, and are making rare, if not dignified appearances in headlines across continents. U.S. guaranteed student loans system is put through the wash, with critics claiming that it is so thoroughly costly, incompetent and over-all corrupt that is should be demolished and rebuild from scratch, rather than being somehow fixed. “The Federal Family Education Loan program, otherwise known as the guaranteed-student-loan program, is unnecessarily expensive, structurally broken, and rife with corruption. It is increasingly clear that our convoluted federal student-loan delivery system, through which private lenders provide government-backed loans to students, cannot be fixed by incremental reform,” writes Thomas Petri. Many seem to agree with his verdict; in fact, if endless streams of student petitions and protests are any indication of the problem, than plain math and solid figures offer the hard evidence.
The second type of the guaranteed loan to make a splash in headlines was government-backed agricultural loan, for which First Capital Bank of Guthrie managed to slightly overcharge the rates for a brief spell of twelve years. The bank has chosen to cash out $1.4 million to settle the lawsuit, rather than fight in court the “baseless” charges. It appears that besides the label ‘guaranteed’ both types of loans do have more in common. Another popular form of a ‘guaranteed’ loan is a slight misconception; that what people like to think of as a ‘guaranteed’ loan, or a ‘guaranteed’ rate, is typically a pre-qualification for a specific loan. This mistake is common. A guaranteed loan would imply that a lender feels so certain about a potential customer, what he approaches the said customer with an offer to acquire a certain product, and a definite promise to deliver that product at the promised price at any time. Needless to say that for a wide variety of reasons (ranging from inflation and the law of probability to highly complicated statistic calculations), this scenario is next to not-existent in the financial service industry. Pre-qualification, on the other hand, is fairly common, highly convenient for all parties involved, and is usually that what vast majority of population call ‘guaranteed’ rate or loan. Pre-qualification means that certain information about the applicant is provided for the loan officer and the tentative loan decision is made. The borrower is typically asked about their credit standing, as well as information such as their employment, assets and income information. Based on this information, the applicant will be told the amount and the interest rate of the loan he pre-qualified for. This offer is tentative, because no credit check is carried out up until this point, and should the borrower decide to accept the proposed loan, a credit check will be carried out by the lender to confirm the borrower’s credibility. Pre-qualification (for a loan) is the least acclaimed form of a ‘guaranteed loan’ that hasn’t made the news - yet.
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