Although it’s best to save your money for a rainy day, sometimes in life that is just not possible. Whether the money is to finance a big-ticket item like a car or home or just some cash to get through until next paycheck, knowing the ins and outs of applying for a loan are important. Before you start filling out applications, it pays to do your homework on how to apply for a loan. Here are the basic steps:
Get a Copy of Your Credit Report: You should be checking your credit report before you need a loan, but who has time for that? So, the next best thing is to get a copy and look it over. Your overall credit score is important; however, just as important is inspecting each item listed to see if it is accurate. Mistakes do happen and old items can linger on your credit report long after they should be removed. Contact the credit bureau, do not contact the company listed, as doing so many “renew” your obligation to them. Plus, by this time an old listing has gone to a collection agency, and who wants to deal with them?
Look Over Loan Products: Yes, there are loan products. Believe it or not, lending companies do compete for your business. Don’t be desperate and take the first offer you see online. Do your homework. Compare interest rates, the length of the loan, and check for any “hidden” fees like late charges. Do a few minutes research on the lending institution and read consumer reviews.
Go for a Reasonable Amount: You might not get the top dollar amount you want on the first try, particularly if you have challenges in your credit report. You many need to go for a smaller amount at first, establish a good payback history, and then ask for an increase the next time around after you have proven to be a reliable customer. Also, only borrow what you can reasonably pay back. Plug the loan payment amount into your budget spreadsheet to see if it works before you borrow. Conversely, go for the amount you need, as that is the whole reason for borrowing. If you have a good credit score, you have more bargaining power with banks and lending agencies.
Filling out the Application: When filling out an application, be sure to provide all of the required information such as your employer’s complete address and phone number as well as the name and address of your landlord or mortgage holder. You may need personal references, so be sure to choose them in advance. Have their complete contact information. Choose individuals who will not only back you up but also be discreet about protecting your privacy, like Mach By Hong Leong. Be sure to ask if they mind if you use them as a reference.