Important Tips That Will Help You Prepare To Get A Loan In 2022

Important Tips That Will Help You Prepare To Get A Loan

Lending to individuals is a practice that has become a part of our lives. With borrowed funds, you can buy almost anything. It can be real estate, a car, household appliances, clothes or vacation. But there are many nuances that the borrower must take into account when applying for a loan.

Basic rules to follow when taking a loan

Before applying for a loan, you should choose the right bank. The safety of the client depends on its reliability. If the bank is large and has a good reputation, then you can be sure that you will not be forced to repay the loan ahead of schedule due to the financial problems of the organization.

If the client is a regular for a particular bank, then he or she is often offered more loyal lending conditions than in other institutions. This encourages constant collaboration. Therefore, it is logical to contact a trusted bank, especially if cooperation with it was successful.

When choosing a loan product, you must clearly understand what the loan is intended for. There are various types of loans. Therefore, you should choose the type of loan:

  • personal loan;
  • payday loan;
  • car loan;
  • mortgage;
  • loan for education, etc.

Itis important to choose the bank that offers the most favorable conditions for the client and takes into account the various nuances of the transaction.

Terms and methods of loan repayment

Each loan has a period for which it must be repaid. Before applying, it is important to correctly calculate the loan repayment period in such a way that you do not overpay the bank commission for unused time (in the case of annuity payments) and do not repay the loan to the detriment of your own needs. The term, as well as the size of the monthly payment, should be comfortable for the borrower.

There are several ways to repay a loan:

  • in cash at the lender’s office;
  • Internet banking;
  • mobile banking;
  • ATM, etc.

Each client can choose the most convenient option for repaying a loan.

Bank loan requirements

If you decide to apply for a bank loan, it is necessary to think about its criteria for selecting customers. Most US banks have the following borrower eligibilty requirementss.

  1. Be at least 21 years old.
  2. Have a Socuil Secuirity Number or Taxpayer Identification Number (TIN).
  3. Be employed and have a stable source of income (usually requires official job and some job experience).

If you do not meet these criteria, then you will be declined for a loan. The marital status of the borrower, the number of dependents, existing loans, the presence of property, additional sources of income, etc. are also taken into account. All this together, as well as a person’s credit history, are decisive when the bank makes a decision.

Due to the fact that banks often refuse loans, in the last few years there has been an increased demand for payday loans online. This is not surprising because the online lending service is much more loyal to its customers than banking institutions. A payday loan is a small-dollar loan that a microfinance institution lends to you for a short period of time, usually for up to 31 days. Loan amoutns typically range bewtween $100 and $1,000 (sometimes up to $5,000) and it is really possible to get such a loan without leaving your home. If you have never applied for an online payday loan before, we have prepared an overview of the benefits of this product for you.

Benefits of online payday loans

  • Minimum borrower requirements. Payday loan providers are designed for all kind of borrowers: students, the retired, disabled people, people with informal employment, and even the unemployed. In most cases, you just need to be of legal age, have proof of identity and residence, phone number and bank account. You will not need to confirm your income or collect other documents. Moreover, a bad credit history and the presence of other debts are also not grounds for loan rejection.
  • The entire process is online. To apply for a payday loan, you do not have to visit the physical office of the company and stand in lines. To fill out the application, you only need a device to access the Internet and a 5 minutes of your time.
  • High processing speed. This is especially important for people who need money urgently. Within 10 minutes, you will know for sure whether a payday loan is approved or you will have to look for some other options. Loan approval rates are very high – up to 95%.
  • Same day funding. If you apply for a  bank loan, you will have to wait for a final decision about 3 working days. As for payday loans, funds are transferred to your bank account the same day you apply.
  • No hidden fees and overpayments. Legit microfinance institutions never charge hidden fees. Before you sign a loan agreement, you can read the agreement to understand the interest rate and terms of loan repayment.
  • Complete security. The activities of payday lenders are regulated by the current US legislation, so such loans are legal. Your data is completely safe because the websites use a special secure protocol.

Does credit history matter when getting a loan?

Your credit history is all your previous experience of cooperation with various financial institutions. There are the three major credit bureaus – Equifax, Experian, or TransUnion. They contain all the information about every person who has ever applied for loans. When considering your application, bank employees will check your credit history. If any bank has blacklisted you as a borrower, then others will also decline you for a loan.

If you do not make an alimony payment, were fined, went bankrupt, or especially if a debt collector filed a lawsuit against you to collect a debt, then it is unlikely that a bank will agree to cooperate with you. In the best case, you will be offered not beneficial loan terms (high APRs and limited amounts). But this is a chance for you to fix your credit by fulfilling your obligations in a timely manner. Next time, you may be able to get a loan on more beneficial terms.

There is also a so-called “grey list”. It includes those customers who do not ideally match the bank’s ideas. If you seek to repay the loan ahead of schedule, then this is not profitable for banks. You are unlikely to get a low cost loan in the future.

5 more things to look for when getting a loan

There are some nuances and tips that you should pay attention to when applying for a loan:

  1. The possibility of early loan repayment without restrictions on terms, amount and without charging fines.
  2. Loyal system for charging late fees.
  3. Possibility of debt restructuring (extension of loan terms, change in payment schedule, commission reduction).
  4. Guarantor requirement (in some cases, a guarantor must be provided to confirm the borrower’s reliability).
  5. Collateral requirement (you can lose the collateral if you don’t pay the loan back.).

A credit card: a worthy alternative?

Each of us has faced a situation where you need extra cash urgently – for example, you may urgently need to go to the dentist or another doctor. Money may be needed for a large purchase or simply for safety on a long trip. It is clear that the best solution in this case would be to have a financial safety cushion, but if this is not the case, then you’d better borrow cash. A credit card has become a popular way consumers pay for purchases today. But what is better: a credit card or a loan?

It all depends on how often and for what purpose you borrow funds.

A credit card is right for you if:

  • You often need borrowed funds in non-cash form;
  • You use borrowed money primarily to pay for purchases;
  • You can get a grace period to use a credit card without interest;
  • You need a convenient tool for shopping abroad or in foreign online stores;
  • You need a backup source of borrowed money for unforeseen situations.

In other situations, a payday loan will be more profitable:

  • If need extra cash rarely and in a small amount;
  • If you need a certain amount for urgent purposes urgently;
  • If have been rejected by banks for any reason – for example, due to your bad credit history;
  • If it is difficult to use banking services in your city (for example, due to a small number of branches).

The benefit also depends on the early repayment policies, insurance requirement, the interest rate, repayment methods and other factors.

Typically, employees of financial institutions provide professional advice and help customers choose the right product. However, personal financial literacy allows you to make choices consciously.

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