Smiling Increases Your Chances of Getting a Short Term Loan, Study Says

Loan ApplicationThere is truth in the saying that positive emotions lead to positive results, no matter what the circumstances are. Even in the microfinancing industry, a borrower’s positive attitude can boost his or her chances of getting a short term loan. The trick, says psychologists at Stanford, is to smile.

In August 2015, researchers Brian Knutson and Alexander Genevsky published the results of their study on how smiling boosts a person’s chances of getting a microloan or a short term loan. The results show that an applicant who smiles while applying for the loan or submits a photograph of him or her smiling will most likely win approval. The researchers suggest that positive emotions play a significant role in the microlending business because they drive successful lending decisions.

The study involved a neuroimaging experiment, reviewing the brain activity of 28 people. The researchers made the participants look at photographs of potential loan applicants and decide whether they will approve the loan or not. The participants also read loan requests before making a decision.

In addition to the neuroimaging experiment, the researchers also studied 13,000 real-world short term loan quests from a large microfinancing company called Kiva. The results suggest that positive emotions, such as excitement, drive lending decisions instead of negative emotions such as guilt. The results aim to contribute to the theories surrounding microlending and the practice of constructing effective loan requests.

What is more interesting about the findings is that it demonstrates that people are more likely to give if the lenders are aroused in a positive way rather than by a negative trigger such as sadness. Moreover, the study proves that in microfinancing, non-monetary aspects such as a borrower’s character, charisma and even a simple photograph can determine the result of the application.

This is great news, especially now that online loan applications are increasingly becoming a trend. Apart from a good credit history, a borrower should send a decent photo that would evoke positive emotions on lending institutions such as for instant approval on online personal loans.

If the borrower evokes positive emotions to the lender, the application will most likely get an approval. But, say, a person looks too grumpy in his or her photograph, the application may not be successful. The study amounts as a “best practices” approach, and if applied, it may even change the way we create loan requests and ask for financial aid.