Whether you are looking for some cash to leverage your investment, to pay off some heavy debts or to launch your business, here are seven smart tips for requesting a personal loan!
#1. Don’t ask for more money than you need!
A few years ago, when requesting a loan, it was common for the bank to offer you an amount greater than what you asked for. In this way, if the initial reason for requesting it was to change your house’s kitchen, you finally ended up also reforming the bathroom or buying new furniture. Nowadays, this trend has changed a lot, both on the part of banks and customers. The former no longer grant loans so lightly and the latter request only the money they need to cover a specific purpose. Are you looking for a personal business loan in Melbourne? Call Kingsley Finance! They can help you obtain your personal business loan at affordable rates!
When you ask for a loan, you will have to return the money they have lent you, along with interest, commissions, etc., making the total amount owed considerably higher than what they loaned you. Therefore, when requesting a loan, it is best to adjust the amount you want to ask as much as possible and avoid paying more interest.
#2. Return it as soon as possible
When the entity with which you contract a loan asks you how long you want to return it, try to make it as short as possible. You must take into account your income and make sure that you can periodically assume the fee. After that, do calculations and try to adjust the repayment term as much as you can since the longer it takes to return it, the less security the bank will have and the higher the interest will be. This is one of the factors that makes the price of loans more expensive. On the contrary, if you pay instalments of a higher amount, you will repay the loan earlier in a shorter period, and it will be cheaper.
#3. Don’t be late for payments!
When you take out a loan, you must pay the instalments within the term you have set with the entity, without delaying a single day. If you comply with the payment later than what is contemplated in the contract, the entity may penalize you by applying default interest, which is usually much higher than common interest. If this situation repeats itself or you stop paying a monthly payment, your debt will not disappear but will increase, and your assets or bank fees could be seized. Therefore, before requesting a loan, make sure that you can pay for it and, above all, comply with the payments on time.
#4. Justify the expense
When you ask for a loan, most entities will ask you what you intend to invest that money in, since it is information that provides them with certain security. It is not the same that you want a loan to pay off previous debts than to buy a car. For this reason, most entities offer specific loans to finance a particular purpose; for example, the purchase of a vehicle, home renovations, studies, etc. These products have very specific conditions and advantages. However, for the bank to grant you these benefits, you must prove that the loan’s purpose is the one you have indicated with the corresponding documents.
#5. Do not resort to “fast money” and without guarantees
When you apply for a loan, entities usually take a few days to confirm that you can lend you money. To do this, they will ask you to provide guarantees that show that you can return it. If you are an employed person, the most common thing is that they request your payroll, which must be of sufficient income, and your employment contract may require that it be indefinite. If you are self-employed, you will also have to demonstrate financial solvency through invoices, bank statements or other types of documents.
However, some entities offer “fast money” and without the need to provide payment guarantees. You must be careful with this type of loan, as they could charge you higher interest or commissions than other entities.
#6. Look at the APR
When hiring a loan, you not only have to look at the interest that you are going to be charged, but other conditions can make your loan more expensive. Thus, when you ask for a credit or a loan, many entities may require you to hire certain products such as insurance or cards or charge you certain commissions that can make the product cost much more expensive than it seemed if you only took into account the interest. Therefore, when you are going to hire a loan, look at the APR (Annual Equivalent Rate), which is the one that includes the total cost of the loan, including commissions, interest, expenses and commissions.
#7. Compare different personal loans
Without a doubt, the best option to get the most suitable loan for each person is to compare the different products on the market and offered by various entities.