Getting financial assistance when you face emergencies can be difficult and also frustrating. In one phase of adult life or the other, one needs to acquire a loan, whether it is to buy a car, house, even pay college tuition fees. And I am pretty sure you know the hassles involved in acquiring a loan, especially one needed in a hurry.
There are a lot of genuine money lenders out there, as there are fraudulent ones. You wouldn’t want to end up getting on the bad side of a loan deal would you? Borrowing money should be with utmost caution no matter the situation you’re facing, so you won’t make a mistake that can’t be reversed.
There are factors that you need to put into consideration when acquiring a loan, therefore, in this article, we’ll explore 4 top tips you need to know when borrowing money from a lender.
4 Things You Need To Know About Money Borrowing
As mentioned earlier, you need to have first-hand knowledge of the guidelines and criteria regulating loans disbursement. This section discusses in detail the things you need to have in your mind when approaching a creditor. Without any further delay, let’s see the factors you need to put into consideration when going for a loan.
1. Loan qualification
To get a loan, you need to qualify for it first as creditors only give out loans to people who they believe can pay back the loan. To qualify for a loan, a person must meet a few expectations, which are discussed in subsequent paragraphs. First, the creditor evaluates the borrower based on their credit score.
A person who has a higher credit score from the past records of his/her loans, is most eligible to get a loan, and in good time. However, if you have a low credit score, you can qualify for a loan with collateral. If you’re unable to pay back the loan, your collateral will be confiscated.
Also, you would need to present a record of your income for a couple of months. This helps the creditor to determine the amount he would lend in relation to your income. When you approach a creditor with these qualifications, you’re most likely to get the loan in good time.
This is the actual money you’re borrowing from the creditor. The creditor, as earlier explained, thoroughly assesses the borrower if he/she qualifies for the loan. The creditor then scrutinises the application, and if their criteria have been met, approves the money requested from the borrower. The original money requested, which is the principal, is the paid to the borrower by the creditor.
After receiving the loan, a speculated period of time is given, which shows the range of time you have to pay back. It is a compulsory that you pay within this specific period of time for a couple of reasons.
Foremost, when you pay on time or within the time frame given, your credit score increases, thereby entitling you to another loan, on request. Also, if you don’t pay back after the time frame elapses, you’d be charged penalty fees, with the loan withdrawn from your account.
4. Interest Rate
The interest rate is the amount being charged for the loan. When you borrow a loan, you’re given the principal, a time frame and an interest rate, which is the creditor’s gain on the borrowed money.
Finally, it is important to know that when your loan term elapses, and if you default in repaying the loan, the interest rate increases with a penalty percentage.
The Bottom line
Loans are difficult to acquire and require thet borrower to undergo a great deal of scrutiny from the creditor. This article has explicitly discussed some of the things that you need to know about money lending.
To cap, when seeking the services of a creditor, ensure to contact, Personal Money store, they offer quick loans, with various time frames for repayment.