Having that first paycheck as an employee is almost everyone’s goal. It then becomes a cycle, Paycheck, Purchase, Work; it becomes routine. But what if the things you buy cost too much or if your paycheck isn’t enough, or say you wanted to start a business? A familiar word then comes up: Loans.
An entity, either an organization(a bank) or a person(lender) is the one who provides loans. Contracts or promissory notes that specify any other details that may prove essential in making the loan possible are then brought out.
For the lot of us, this task may prove daunting at first but with help from several sources, including this article, applying for that loan will be a cake walk. Here are some sure-fire tips that make applying for loans easy and safe.
Knowing What You Need
You should know what type of loan you are applying for or getting into before you make that quick purchase. Weighing in tons of possibilities from both choices would prove easier in your decision.
Secured loans are loans that require collateral for it to get approved. Collaterals are items or property that a lender can legally acquire from the borrower, should they fail to pay back the loan.
Although you have to bring in something of value for a collateral, there are advantages. Due to the collateral involved, you can expect this kind of loan to have a higher limit than unsecured loans. Secured loans also get approved easily as lenders are more willing to give money in exchange for a valuable collateral.
Unsecured loans on the other hand, don’t require a collateral for it to be approved. This fact however, makes it less desirable for lenders. Don’t worry though. If you have good to excellent credit scores, a lender won’t hesitate to approve your loan. Some examples of unsecured loans are student loans, personal loans, and credit card loans.
There is nothing wrong with choosing one of them as long as you make the smart choice. Knowing what type of loan you’ll need or want will make finding the perfect low interest personal loans for you much easier.
Having Good Credit History Helps
Speaking about the right choices, it is important that you understand your credit score before you apply for any other types of loans. In the past, a lot of companies discouraged people with bad credit ratings from applying. In the present, however, the trend is changing. Some companies are now willing to take on high-risk borrowers, with a few catches such as extra high rates and limited loan amounts.
Try Shopping for Lenders Online
You have to know where your loans will be coming. For personal loans, the two most widely used sources are from your bank or a credit union. Although each may present with you with different and enticing advantages, they also come with their disadvantages.
Alternatively, you can also try searching for online loans. These sites often require you to fill up their forms. You should also prepare the personal information required. Remember, only visit trustworthy sites.
Once you find a site that’s worth doing business with, fill up their forms. After completing all the necessary data, the lender will then determine if your loan will get approved. After that, you’ll get presented with a contract.
Always read and understand the contract as this includes everything you need to know about your loan. After signing your contract, you can expect to have the amount stipulated in the contract to be transferred to your bank account within 2-3 business days. Only consider applying for loans from accredited organizations and entities.
Give Hard Inquiries a Pass
Speaking of online lenders, make sure that the one you’re working with doesn’t require you to do a hard inquiry on your credit history. Running hard inquiries can make your credit score fluctuate, and can even lower it even more. A bad credit score will make your loan options limited. Instead of a hard check, try opting for soft inquiries. Soft checks don’t have an impact on your credit history.
Avoid Loan Sharks
You wouldn’t want to borrow from “shady” people. A perfect example of this is when people mistakenly borrow from loan sharks. Loan sharks are people who provide the money that you need but demand payment that skyrockets those figures and estimates that a bank would provide. The advantage here is that you get money fast, but you end up in a dangerous situation with a debt that’s near impossible to pay.
The things to remember: The types of loans you need to be familiar with, your personal credit history, Knowing where your credit comes from, and most importantly knowing and assessing your individual financial requirements. With all those tips in mind, applying for that next loan for your small-time ventures or that brand new car wouldn’t be that of an intimidating task anymore.