The Simple Things That Make Applying Easier
So you need money for something like a household item, major repairs, a vacation and perhaps, an investment. And debts. Personal loans are generally used for everything except debts. More on that later. Right now, you need to go chase a financial solution. So, here we go. Best foot forward. Applying for a personal loan can be a stressful process. Here are 10 tips that arm you with what you need, so that you can walk up to lender with more confidence. Wouldn’t that be nice? So, let’s go get you a loan.
- WHAT’S THE SCORE?
First of all, ask a lender you think you want to pitch to what loan guidelines they follow. They will certainly mention credit scores. There are various ways to find out what your credit score is. Lenders will check reports from such providers as Equifax and Experian. They’ll go as far as to compare the reports. But more importantly, you should check reports yourself to be sure that the information contained within them is accurate. If you have missed some payments, those will probably be on your file. You can also ask your lender to report your on-time payments, but I’m getting ahead of myself. By the way, it can take 30 days or more to correct the information, so be prepared to wait.
You can get a free credit score online, but be sure the online credit reporting company has a good reputation. Credit scores will ultimately affect the interest rate you get. Last thing. If your credit score is below 700, most traditional banks will offer you best wishes for a great day … and not much more. Good news is, alternative options, like Cashco Financial, may be able to help.
- HOW DO I PICK A LENDER?
It’s a financial jungle out there with banks, credit unions, alternative financial institutions (like Cashco) and online lenders. The opinion of this writer is that it is better to talk face-to-face with someone who will actually listen to you and offer guidance that makes sense, but the lure to online solutions is growing more and more. (Luckily, Cashco also provides an online process. And then, you get to meet a real human being.) If you are someone dealing with challenged credit, which, to be blunt, banks often refer to as “bad credit” (a description I detest), then you are better served by talking to someone directly. The culture at a financial institution, like Cashco Financial, is such that every individual has different needs and is operating under different circumstances. To them, there is no such thing as a bad scenario. In fact, they help clients look forward. It’s a culture and philosophy that makes more sense in today’s volatile economic situation.
Online applications can be very quick and some online broker services can shop around for solutions from multiple financial institutions in the quest of getting your personal loan. If anything, you have the chance to compare possible solutions. BUT, and it’s a big “but”, there are a lot of questionable online lenders out there. Unless you know how to qualify or verify the validity of the lender, you are better off staying close to home and talking to real people at real institutions, like Cashco Financial, who will not lead you astray.
- BY THE WAY, WHAT’S THE DIFFERENCE BETWEEN A PERSONAL LOAN AND A CONSOLIDATION LOAN?
This has often confused me, too. But there are differences. It’s not just that a loan is a loan is a loan. (Leave me alone to sort out the confusion.) So here we go. A personal loan is for a lower amount that doesn’t require a security agreement or collateral; like a car loan where the lender asks you for a security interest in the car, a “lien” (to you and me). As a result, these loans carry higher interest rates than secured loans.
A debt consolidation loan combines your debts with one monthly payment. (Yah, so?) In other words, you pay off the creditors you owe and then you pay the lender who gave you the money to do that. Debt consolidation loans can be helpful only if the interest rate of the consolidation loan is lower than the rates of the debts you are paying. Clear as mud? (PS, after you get the loan, hide the credit cards.)
You can use a personal loan to consolidate debts, but, again, personal loans usually come with higher interest rates than secured loans. Moving on.
- SURE, LET’STHROW THAT BEDROOM SUITE WE WANTED IN, TOO. WE’LL ASK FOR MORE.
You know what you need and, maybe, don’t need. But what can you actually afford? This is the trigger that can send you either into a deeper money pit or turn things around for you financially. Frankly, as a species, we’re terrible at making the better choice. The longer the term of the loan, the more interest paid, the less you will be able to do because … because … say it with me … there was no budget considered at the outset. All too soon, your month to month budget (with the loan) becomes a headache. Three things you need to remember. 1. Figure out the absolute minimum you need. 2. Plan to pay off the loan as quickly as possible. 3. Don’t overstate or understate your income. Be realistic and accurate. With these guidelines followed, you will accomplish many financial objectives and, in the process, dramatically improve your credit score. This creates opportunities in the future. Frankly, it’s the toughest thing we face as a consuming animal: to ask for only what we need and pay it off quickly.
- WHAT ARE THE FINER POINTS OF FINE PRINT?
Be honest. Do you read the fine print? It’s a fee-for-all. Prepayment fees. Fess for late payments. Penalties for paying off the loan early. Ask for complete disclosure. Ask the lender to identify all fees and penalties. Period. My work on this tip is done. (Disclaimer: do not ask for disclosure when pregnant, distracted, or operating heavy equipment. Consult your doctor, because he probably has a lawyer who reads fine print. Disclosures can cause misty eyes, confusion and palpitations. Only read the fine print with magnifying glasses.)
- I WILL MAKE EVERY PAYMENT ON TIME FOREVER.
You wish. If you are that kind of person, then skip this tip. If not, read on. Whether it’s called ‘loan repayment insurance’, ‘payment protection insurance’ or ‘credit protection insurance’ (and it even has other names), it’s worth it. Certainly, you should evaluate the cost. But remember this, your credit score is the cost of opportunity. Invest in it. Also, don’t assume that the lender will offer you the best price on this kind of insurance. Shop around. Do it. It’s saved my bacon more often than not.
- PREPARE FOR THE PERFORMANCE.
What I mean is, have ALL your documents ready to go. In fact, rehearse what you’re going to say with all the necessary props you are going to use. Be prepared to show the lender that you have done your homework and that you have considered your budget and what you need. When you can pull out your own credit score, the lender will know you are diligent and responsible. It may not be a slam dunk, but I’ll put my money on you that they’ll put their money on you.
GO GET ‘EM LOAN RANGER.
There are many more tips, too many to include in this article. By all means, google “personal loans”, “getting personal loan”, “apply for personal loan” … choose your flavor. There are many excellent articles and sources of information out there. I hope this article helped you take a step forward to a plan to get your personal loan.