8 Tips Before Getting a Loan
In today’s millennial-driven economical ecosystem, people are not just thinking, working and playing at enhanced speeds.
They are also spending at those speeds, if not faster. This only means that we often find ourselves in need of extra money to cover our millennial-influenced lifestyles.
However, taking out loans is not always ideal and often still feared. We want to reduce debt, not create more of them. More and more people are finding themselves at this common crossroads. Needing the money right then and there is inevitable. So mulling over should I or shouldn’t I, could waste a whole lot of time, when at the end of the day you will still need the loan. Money unfortunately still, doesn’t grow on trees!
Whatever the situation, just one mistake can have crucial consequences which can be dodged. Find out how to reduce the implications of taking out a loan and avoid those nasty mistakes that come with the process.
1. Don’t just pick the first lender – Shop & Compare
Taking out a loan is like buying a new car - you wouldn’t buy the first car you test drive?
It’s always a good idea to explore your options. Taking the first loan you get offered can be a big mistake, because the first loan might not be the best.
Shop around, explore your options
Look at multiple loans – online loans, visit local banks, and remember, research is key!
The most important thing is to ask questions and to try and find the best deal for you and your financial situation. Look around, explore and research. When looking at different loan options, always remember to read the fine print (terms and conditions), before you sign on the dotted line.
Rushing into a loan can be risky and cost you more than you can afford. Which could also be detrimental to your lifestyle and credit score if monthly payments are not met. Rather be safe than sorry!
2. Don’t just spend – Create a budget
Budget – yes you still need one of these, even when getting a loan
Taking out a loan means that you are required to pay it back. You need to work out how much you are able to pay back.
Be smart, and make the right decisions about what you can give up or cut back on, instead of being stuck with a hefty repayment every month. Be realistic.
Have a budget in place
The best would be to have a budget in place and to set aside the amount that is needed for the loan. If possible you should always try and pay more than the minimum amount – by doing this you will be able to pay off the loan quicker and end up saving some money. If, however, you fail to budget effectively, and are struggling to make payments, the end result will be a much more expensive loan in the end and it could affect your credit score negatively.
3. Don’t “over shop” for the “right” interest rate
Doing too much research or “overshopping” for the lowest interest rate, could waste a whole lot of precious time.
It’s a good idea to shop around before you settle for a loan, but another mistake that people often make is waiting or continuing to shop around until they find a loan with the lowest interest (borrowing) rate. If you carry on shopping until you find an even lower rate than what’s on offer, you could be researching forever and ever.
It is often difficult to determine which offer has the lowest rate, especially since the interest rate keeps on fluctuating. So what should you do? The best advice would be to accept the deal you have now (with the lowest rate of course). Sometimes it’s even recommended that you make a decision sooner than later. Interest rates are constantly changing
4. Choose a Reputable & Registered Lender
Choosing a reputable registered lender is important.
Another mistake that people often make especially when they need an emergency cash loan or any other type of loan immediately is that they go to the first lender available.
To avoid this mistake, you should do some research, visit various websites, call different lenders and ask the necessary questions, to make 100% sure; they are the people you are going to approach for a loan.
5. Don’t Neglect Extra Costs
Remember when getting a loan, there are always extra fees involved. Make sure you are fully educated about these costs. Know them like you know the back of your hand.
When you are in need of a cash loan (whether it is a short-term loan, quick online loan or an emergency cash loan), you often forget about all the extra fees and costs that are involved.
You could end up paying more
This could be a big mistake since you could end up paying more than you budgeted for. Always read the fine print and know exactly how much the interest rates are, how much you will be paying back in the end etc. The best way to approach this is to make sure that you have everything written out in black and white. Cross all your T’s and dot all your I’s. It’s a good idea to read all your paperwork thoroughly before signing anything.
Cost transparency of your loan is absolutely vital.
6. Be Honest on Your Application
t’s not a good idea to try to trick the system. Remember we mentioned transparency? You wouldn’t want your lender lying to you or giving you misleading information regarding your loan. So why would you lie to them?
One thing we should all remember is that when we lie, no matter how small or big the lie, one way or another it will catch up with us. Never lie when you fill out your loan application, don’t lie about your income or your credit score.
This is one very common mistake that you would want to avoid at all times, even if you might think that it won’t hurt anyone to tell a “white” lie. One white lie can result in distrust and building a trusting relationship with your lender is key.
7. Check Your Credit Score
Before applying for a cash loan it’s a good idea to always check your credit score.
You don’t want any surprises arising which could negatively impact your loan application. It’s good to keep dibs on your credit activity. You never know when you might need a loan.
If you do forget to check your credit score and it does happen to be low, you could end up paying more than you were prepared to. Which could in turn affect your budget and the overall process of applying for your loan. Avoid wasting time. It is usually an easy task to quickly see how your credit history affects your financial situation. It’s generally pretty useful to know your credit score to keep track of your credit history.
If you do happen to have a low or bad credit score or for whatever reason, there are implications to receiving a loan there are online cash loans companies such as Just Cash and First Choice Finance, which will help you, to quickly and easily get a cash loan.
8. Always Ask Questions
This is probably the biggest mistake that people make when it comes to getting a cash loan.
Ask questions, and be curious. This is the one time you are allowed to be nosey!
Remember borrowing money is a big decision and you should know exactly what you are getting yourself into.
You should sit down with the lender and talk to them honestly – let them know your thoughts and concerns. Write down all the questions you may have and make sure you receive clear and concise answers, which you understand. By doing this, you are going to most likely get the best loan for your needs and situation.
By keeping these 8 thoughts in mind the next time you are thinking of getting a loan, you are going to be able to avoid some of the most common and biggest mistakes one can make.
We said it before, whether you are looking at a short-term loan, an easy quick online cash loan or a fast emergency loan, remember it is not a decision you should make hastily or lightly, there is a lot of money involved.
Always be 100% sure.