4 Mistakes to Avoid When Applying for a Personal Loan
Getting a personal loan is no small affair, especially when finances are tight and you’re unsure about your credit situation. Luckily there are a few companies out there that can help you when it comes to your credit situation. The last thing you want is to make a crucial mistake that could ruin your chances of getting approved.
Here are a few mistakes that you should avoid at all costs if you were thinking of applying for a loan.
Not Giving Your Credit Report a Check
It’s still surprising to see how many people in this day and age still have no idea what their credit report looks like and know even less about their credit score? When asked about their credit scores, people will usually have one of two answers, good, or bad. But asking for a copy of your credit report before you decide to apply could save you from unpleasant surprises. If you can, try to remove derogatory items from credit reports before you apply for any loans as they can be a big hurdle to cross if you don’t. It can be the difference between buying the home of your dreams, or having to rent for another five years.
It’s always better to have realistic expectations before you even start looking for lenders. This will narrow down your search and prevent you from wasting your time and hopes on lenders who won’t even consider your application. For instance, Installment loan direct lenders might be more inclined to accept applications for unsecured loans to applicants with low credit scores. But simply because they don’t put so much emphasis on stellar credit scores, doesn’t mean that they’ll accept under any condition. You’ll still usually have to have a minimal credit score to be accepted and be able to provide a steady proof of income.
You could also try to ensure you only apply for lenders who don’t charge you to apply, as then you’ve got nothing to lose. One example of this can be seen at Everyday Loans who don’t charge and will give you a quick decision, so if you’re unsuccessful you can just move onto another lender without having to worry about any lost time or fee.
Not Being Truthful
Lying in any way shape or form on your application is the best way to have it sent straight to the shredder. You may be tempted to fudge some details or intentionally omit some others, but the lender will find you eventually. Refrain from lying about credit score, employment history, income and everything that could be used to gauge your eligibility to get a loan. Even hole in the wall lenders can access information about your history fairly easily, so don’t make the mistake of thinking that certain lenders aren’t as rigorous with their background checks.
Not Understanding the Terms
When in a rush, many people will gloss over some aspects of a loan, especially when it comes to bad credit loans. In many cases, people in desperate situations never envision the worst-case scenario. So, when they hear about penalty charges and collection policies, they have a tendency to ignore them altogether. So, if there is any term that you do not understand, don’t be afraid to ask for further explanations. There is absolutely no harm in doing some research of your own into the collection industry either to deepen your understanding of your loan company. For instance, you can learn about the necessary insurance and licensing requirements for collection companies by checking out some of the resources on the Cornerstone Support website. And never forget that some parts of your contract can be negotiable, so don’t be afraid to haggle.
Not Calculating the Payments
Understanding the total amount of a loan is one thing, but knowing the actual cost and monthly payments is another. First, make sure that you know any additional charges and fees associated with your loan. The next step is to calculate your monthly payments. If you’re unfamiliar with how interest rates work, you can always use one of the many loan calculators online.
All you’ll need is your annual interest rate, (you might need to use an APR calculator to find this), total amount of the loan, and the loan’s duration. Once you get your results, divide your loan fees by the number of months and add it to the total to get the actual monthly cost of your loan. This is the best way to plan your budget and see how much you can really afford.
While looking for financing with questionable credit can seem like an uphill battle, you can significantly improve your chances of getting approved simply by refraining from committing the mistakes outlined above.