No-one is super-excited
about having to get a loan, but doing so is often the only way of achieving
your goal, regardless of whether it’s a business or a personal decision. Unless
this is your profession, you probably know little or nothing about loans so, in
order to avoid causing financial dents in your budget, we’ve come up with a
list of things that you need to know before applying.
Browse
Shopping around before
taking out a personal loan should be the first item of your agenda. The main
thing to keep an eye on when “window shopping” for loans is the APR – the
annual percentage rate, because it tells the real cost of taking out a
loan.
Payment Protection Insurance
When it comes to shopping
around, the PPI
should be right next to the APR on your agenda. The very point of payment
protection insurance is covering your monthly credit card or loan payments in
case of being unable to meet the deadlines for a variety of potential reasons.
The cheapest deal should be your aim. Additionally, avoid buying a policy
directly from your lender – this is a more expensive alternative than opting
for standalone providers.
Think About Taking More than You Might Need
While this may sound
counter-intuitive, keep in mind that interest rates drop as the size of the
loan increases. Now, this is not to say that you should go crazy here by taking
out a loan twice as much as you might need, but borrowing slightly more than
you planned on doing can actually save you a buck or two.
Careful with the Number of Loans
Applying for loans leaves a
certain “footprint” on your credit record – something that lenders like to keep
an eye on before approving a loan. The larger this footprint is, the less
likely you are to be approved for a loan, seeing as how this makes you look
desperate.
Think It Through
Getting a loan should pretty
much be your last resort. Although there is no shame in lending money, there
are many forms of credit that might turn out significantly smarter solutions,
such as using a credit card with a 0% introductory offer on purchase –this way
you get to spread the cost of large investments and purchases.
Keep Your Credit Rating in Mind
Before doing anything
related to lending money, always check your credit rating. If it’s in good
shape, there might be a less expensive deal on the table for you.
Consult Professionals
Checking with the experts is
always advisable, especially when there’s money at stake. Investing a bit more
might get you great financial advice which, in turn, will save you a whole lot
of money further down the line. On the other hand, some companies such as Clean
Credit offer obligation-free assessments, which is
definitely a smart way to go.
Borrowed Money Isn’t Your Regular Money
When it comes to personal
loans, there aren’t many limits on how you can use the money – the lenders are
mostly concerned about the how and whether you are planning to pay them back.
However, there are lenders who will allow you to spend money solely for the
purposes that you have stated in your loan application. This is where shopping
around kicks in once again – you need to get to know your lender in fine
detail.
Getting a loan isn’t the end
of the world, even if you are pretty desperate about your financial situation.
However, browsing for the best fitting lenders is definitely smart. Keep an eye
on your credit rating and never refrain from consulting professionals!
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