7 Tips to Ensure Success When You Need a Loan
If you’re like most people, then no matter how diligently you save money throughout the year – there comes a time when you simply need money now. It could be an impending hospital bill, an important purchase, overdue rent, or similar emergency. Depending on your overall financial situation at the time, you could have few options.
Despite how it might seem, the option of securing a personal loan is almost always available. Banks, credit card companies and other lending institutions understand the need for immediate cash; thus the competition for the best personal loan rates is fierce between them – and this benefits the consumer.
Beyond obtaining new credit cards1 to help shoulder the burden, your success in securing a favorable personal loan hinges on knowledge in preparation. In the following, you will learn some of the tips that have helped millions of Americans who need cash now. A successful loan acquisition begins with planning and ends with diligent execution. Without further ado:
1.If You Need Money Now, Get the Best Deal on a Personal Loan Offer
Given that people take out personal loans for different reasons, your best bet is to first make a quick spreadsheet of what you need to pay off or why you are getting the loan in the first place. Some of the most common reasons for the consolidation of credit card debt, business investments, vacation travel, or for home design/improvements.
The reason for this accounting is to determine what type of loan is best for your specific purposes; sometimes, a line of credit is superior to a home equity loan, for example. The interest rate you receive will be different for either one and potentially more in line can afford or are willing to pay. This step makes it a lot easier to ensure that the personal loan office receive are the best ones possible – you can see the strengths and weaknesses once you enter them into your spreadsheet.
2.Understand All the Costs Involved
When it comes to acquiring personal loans, it is not always obvious what the total costs involved are. In addition to the interest rate, you should use a loan repayment calculator to assess the costs of the different factors. First of all, what is the monthly payment? You obviously need to be able to afford them easily while leaving some cash available for new expenditures. This keep in mind that the interest rate you receive is inextricably tied to your credit worthiness at the time. With some types of loans, you can be negotiates for better rates as your credit history improves and your FICO score increases2 in the coming months.
Of course, you also have to consider the total costs to make sure that the total loan amount and length of the term does not result in a larger overall repayment. There are origination fees to look out for, too if your lender tacks them on.
3.Gauge Whether a Loan Cosigner is Beneficial
A personal loan cosigner is generally a good idea for people with low FICO scores. If, for example, your score is between 580 and 680, your interest rates will be higher if lenders approve your loan. Since interest payments add up, it might benefit you to use a family member or close friend as a cosigner on your personal loan application. The effect of this is that lenders average your two credit histories to produce a higher results and thus lower interest payments for you. Of course a lot of responsibility is taken on by a cosigner, since if you default on the loan this negatively affects the credit history.
4.Improve Your Credit Score First
Although this article is mostly for people who need money now, if you got a few months before you require a loan, then it’s a good idea to raise your credit score. This is done by making sure all credit card payments are on time, you don’t have to much revolving credit already in existence, and you don’t open new credit cards. As stated above, a higher FICO score leads to better interest rates on your eventual personal loan.
5.Have Your Finances In Order Before Credit Card Consolidation
If you need a personal loan for credit card consolidation, it is especially important to have all your finances in order beforehand. Is a very strong tendency to rack up fresh credit – especially if you have an account for the costs for the consolidation. You figuratively want to cut that credit card in half so that you fully pay it off before using it again.
6.Order Your Credit Report
This is one of the most overlooked potential contributors to the success of getting a good personal loan offer. You can order your free credit reports3 once every single year is guaranteed by the American federal government. In fact you should order your report from all three credit reporting agencies; this lets you check for discrepancies that, once resolved, can actually raise your score sometimes. This leads to better interest rate terms. In fact, the difference between having one credit score and another can be as high as 20% in terms of what you pay monthly and overall. Additionally, once you settle on a lender – be sure to request that they report your timely payments because this can raise a score even higher for better terms down the road.
Lastly, you can avoid future issues with timely payments by following a simple-but-oft-overlooked general rule: NEVER borrow more than you calculated that you need. Because of the penchant to see this as free money, it is tempting to take on more cash – especially if it’s available at the lender’s request. It’s a common sales tactic to try and convince you to borrow even more money; this leads many Americans down a rough road as they struggle to keep up with the monthly payments, and end up paying a substantial factor more than they planned to buy the end of the loan term. Basically, stick to your guns!