When it comes to loans, it may surprise you to find out that timing plays a role in the approval process. This is due in part to what's known as the reciprocity principle.

Learn how to make this principle work for you when you're trying to figure out the best time to apply for a personal loan.

What Is the Reciprocity Principle?

The reciprocity principle[1] is one of the building blocks of modern social psychology. It refers to the idea that when a person is given a gift or privilege, they will want to give one back.

How It Applies to Timing Your Personal Loan Application

Plan to use the reciprocity principle to your advantage when applying for a personal loan. Start by thinking of your financial business and loyalty as a "gift or privilege." Of the many financial institutions and lenders to select from, you are choosing one in particular.

If you approach a lender to apply for a personal loan but haven't yet established a relationship, there’s little information available for the lender to review when deciding to approve or decline your loan application. Yet if they can easily see a history of your financial behavior, such as your transactions on a bank account, it may help speed up the decision process.

Time your loan application so the lender can see you’re already a customer. According to the reciprocity principle, if there’s already a standing relationship your lender will likely be more willing to work with you to help get you the best terms.

There are several options to choose from when it comes to establishing yourself as a loyal customer before applying for a loan. For example, you could open a checking account to take care of your day-to-day banking. You can also start an auto-transfer from the checking account to a savings account, which shows that you've chosen to commit to the lender and to saving money.

You may also choose to apply for a credit card to establish or build your credit. On the other hand, you may prefer to simply keep your checking account in good standing for at least six months prior to applying for a personal loan.

Think about your loan application in terms of timing, and how the reciprocity principle fits your situation. Maybe today’s the day to talk to your lender. And maybe you’ll find yourself with a loan approval sooner than expected.