Five Factors to Consider Before Applying for a Loan
Are you dreaming of a new car? Or perhaps you need a little extra money for your fairy-tale wedding, or you are planning to start a family? A personal loan could be the exact financial solution you need to meet your desires.
Taking out a personal loan can be a big decision to make, so we have comprised a list of five things to consider before applying – to make sure you are getting closer to your dream.
Know the Types of Loans
One of the first things to think about is what kind of loan you should apply for? This will all depend on what you plan on using the money from the loan for. If you are looking into buying a car, a car loan perhaps is the best option for you. If you need to pay for classes for school, think about student loans. If you need the money for a variety of purposes, a personal cash loan is probably your best bet as you can spend it on essentially anything, with no requirements from the lender.
Profile the Lender
After you have determined what kind of loan you need, it is time to search for a lender. Your first instinct may be to go to your local bank or credit union which can be a great choice. However, you should also consider online lenders. You can find amazing deals on online loans, and many will even have better interest rates and terms than big banks can offer you. In addition, you can apply for online loans from the comfort of your own home, any time of day! Look for a lender who has a loan that suits your needs and apply anytime you are ready.
Monthly Payments
Before you apply for a loan, consider what the monthly payments will be. You want to be sure that you can afford the loan payment as any missed payments will reflect negatively on your credit score. Your lender will be able to tell you how much your payments would be before you apply so that you can assess your options. In addition, ask if you are able to pay more than the minimum each month if you are able, paying your loan off sooner.
Know Your Credit
Many loans, whether it be online loans, bank loans or car loans, will depend on your credit and financial history. In addition, every time you apply for a loan, there will likely be a hard credit inquiry on your credit report, which can bring your score down. You only want to apply for and be approved for a loan once! Check your credit score before you apply for any loans. When you find a loan that you are considering, see what the credit requirements are. If your score is within the required range, apply! If not, keep looking. There are many online loans that will suit your needs, even if your credit is less than stellar.
Identify Hidden Charges
Make sure you read the fine print before finalizing a deal. There might be charges you are not aware of, especially for home equity mortgages. Find out about things like early repayment fees, arrangement charges and the like.