7 Personal Loan Tips and Tricks

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. 

 

 

Why Choose a Loan Broker Instead of Going Directly to a Bank

You have a desire to renovate your home or escape to faraway countries, the acquisition of a new car or significant unexpected expenses: the personal loan is here to provide an answer to all your projects according to your repayment possibilities.

Take the time to think about it: credit commits you, so it must be repaid.

When rates start rising, many borrowers wonder whether it is in their best interest to approach a broker or their bank to get the best possible terms.

On the one hand, a loan broker is an independent banking and payment services intermediary who goes around the banks with his client’s file under his arm to find the best rate.

On the other hand, banks, with ambitious business objectives, know their customers and frequently agree to negotiate their financial terms to keep their “potential” customers.

Banks’ Strengths in Lending

The first reaction of someone looking for a personal loan or a mortgage is to go to his bank.

Note: this is a good reflex! It is better to ask him to make an offer, even if it means asking a broker to find a lower price and then measure the gain that could be obtained.

The request for such an offer can concern:

The personal loan: this credit can be affected or not affected. The borrower is then free to use the sum lent as he wishes.

Example: it is intended for those who wish to renew specific equipment (cars, household appliances, computers, sofas, etc.), finance a trip or a family event (wedding, christening, etc.).

Home loans: fixed or variable-rate, this type of loan commits the borrower over a long period.

Good to know: rates tend to rise.

Why Choose a Bank?

The main advantage of taking out a personal loan or a mortgage with your bank is the simplicity of the process. The bank knows its client and the history of his or her financial situation, which allows it to process the file in a relatively short time and without having to provide a lot of supporting documents.

Moreover, unlike brokers, who generally have pre-negotiated agreements with some banks, a banker has a wider margin for negotiation.

Banks have credit production targets that vary from one network to another. If a borrower is determined to compete on his own, it is in his interest to follow the commercial offers periodically promoted by the banks.

Good to know: before granting credit, financiers systematically consult the personal credit repayment incident file.

Why Do People Prefer to Choose a Broker?

Brokers’ Assets in Terms of Loans

Whether it’s a consumer loan or a real estate loan, brokers do not lack in assets: they are, in a way, the “heads hunters” of financing.

They are in charge of making the rounds of the banks to negotiate the best conditions.

A personal loan broker is a financial intermediary who is commissioned by an individual (borrower).

His main goal is to find the most advantageous interest rate at the most attractive conditions for his client by comparing the offers of financial organizations.

Thanks to the volume of loans they bring to the banks (more than 30% of total credit production), these intermediaries negotiate directly with the banks’ credit department. In addition to the application fees paid by the applicant borrower, they pay themselves by deducting a percentage of the amount borrowed.

They have the technical know-how and network to negotiate loan conditions more keenly than an individual could do alone with his or her banker.

Moreover, using a broker saves time since it is the broker who will compare the bank’s offers.

In conclusion, the broker will, therefore, put the different financial institutions in competition with each other to find the best credit corresponding to your needs, according to your repayment capacity.

Note: This competition does not only concern credit underwriting, but also the renegotiation of loans in service, the grouping of consumer loans, etc.

Where appropriate, the offers sent by a broker may be useful for negotiating (or renegotiating) a loan with your bank, which in some cases can be aligned.

Personal Loan Broker: For What Types of Project?

A broker or a brokerage firm can be called upon for several types of project:

development work: personal loan work;

the purchase of a vehicle: personal car loan;

leisure activities (holidays, purchase of a home cinema): personal credit for leisure activities;

treasury (marriage, financing of studies, unforeseen expenses).

Concerning the Purchase of Personal Loan:

If you are in the region of Melbourne, Adelaide and Sydney, it is advantageous and prudent to go through a broker specialized in credit redemption. Liberation Loans has been in business since 2006, and they will find a tailor-made solution for your financial needs.

Its essential objective is to rigorously study the best offer for grouping the various credits to avoid the filing of an over-indebtedness file. Hence, you can also get a personal loan repurchase.