Here are some tips on how not to get a loan, followed by what you should do instead.
- Ignore the cost of borrowing.
Some examples are insurance plans and fees for paying ahead of time. Make sure you understand all of them and are ready to pay for them. Know the terms and conditions of your agreement before you sign it.
When interest rates and fees change, a loan may cost too much. The annualised percentage rate will determine how much your loan will cost you in total (APR). The interest amount and all other fees are included in the annualised percentage rate.
- Choose the first lender that comes to mind.
From loan sharks to credit unions, deals are very different. First, look into fully mutual building societies and credit unions. Then, look for loan-only companies. The first ones were made to help their members, and the second ones only make money by lending money. They can offer deals that are better.
- Only talk on the phone, and don't write down the name of the person you talked to.
If you call your loan company, make sure you get the full name of the person you talk to. Big offices are impersonal, and your loan officer could leave at any time. Write letters to keep track of things that are important.
- Get a loan because you think, "Well, I can always go broke."
This is a dumb idea. When you really need credit in the future, it will be very hard for you to get any kind of credit.
- Don't look into the lender.
Use a search engine to look up the name of the lender. Check to see if there are any bad things written about them.
- Who cares how much it will cost?
Think about how much you can spend each month based on your budget. Then put some of your monthly income aside to cover emergencies and bills you didn't expect.
- Don't rush to pay it off.
No matter how cheap a loan is, you should pay it back as soon as you can to avoid paying interest. Try to get a loan that lets you pay it back early. The sooner you pay it back, the less interest you'll have to pay. If you make the loan last longer, you'll pay a lot more in interest.
- Find out as much as you can in a short amount of time.
More than four credit checks in a month for a personal loan makes you look sketchy and could hurt your credit score. Ask them if they will check your credit rating when you are looking for a quote, just to be safe. To give you a rough idea, they don't have to.
- Make sure you have a lot of credit and then ask for more.
Keep your credit line as small as possible to make sure you get the best terms. Most loan officers count the total amount of available credit as a liability.
If you didn't pay off that rent-to-own deal years ago, it will come back to haunt you. Pay off small debts ahead of time. Don't keep credit cards you don't use. IMPORTANT: Keep your oldest card because it has a record of your credit history on it. If not, think about their interest rates and fees to decide which ones to keep.
You're anxious. You need the money right away. When you find out what's in the fine print, you'll be very upset.
If you can't pay back your loan, write to your lender right away. The sooner you tell them, the more they'll care about you. Then, you can make plans to pay less than what you owe until you get back on your feet.
