This guide outlines the key steps and strategies to apply for a loan and have success with your application.
A loan is an extremely valuable alternative for anyone looking to resolve an emergency and pay off over a longer period of time. However, the variety of options available is quite large when you apply for a loan — and that requires careful analysis to make the right choice. After all, what should we take into account when deciding where and how to apply for a loan?
Tips to apply for a loan successfully
To answer this question and clear up your doubts, here are some essential tips for you to make the right choice and have success when you apply for a loan.
1. Check the company’s credibility
Regardless of the reason for you want to get a loan,the first point is precisely to know the company where you want to apply for a loan. This means not only thinking about whether you’ve heard of that institution, but also doing a more detailed search. In addition to entering the company’s website, the coordinator suggests that consumers do some searches on the internet, and also look at review sites and government sites that can help you choose a good provider like Now Loan.
On these sites, you will find reviews made by other customers of the company, an extremely valuable information to differentiate between good and bad service. It is also worth consulting your closest contacts: any relative or friend who has already used the services of this company. They are the best people to point out the benefits or problems you may have.
2. Perform a total effective cost analysis
In addition to the company’s own reputation, the terms of the deal are, of course, an essential factor to consider when you apply for a loan. Still, a common mistake made by those who are not used to dealing with the subject is basing the analysis simply on the interest on the loan. As much as the percentage says a lot about how much you’ll pay, it doesn’t represent the whole picture.
The total effective cost is essential for the consumer to make this analysis. The borrower needs to know how much he or she is paying in charges, fees and tariffs over this period. The details, in this case, make all the difference.
If the borrower has a higher total effective cost, even if this company is offering a lower interest rate, in the end he will pay more. In other words, the total amount, not just the interest percentage, must be evaluated. It is one of the most fundamental and most important points to be aware of.
3. Conditions for renegotiation and advance payment of instalments
While part of the evaluation process can be done in advance (in planning), some issues should be compared already in contact with institutions when you apply for a loan. When contacting for a personal credit analysis , it is also important to check the conditions for any renegotiation or advance payment of installments .
In practice, we are talking about a situation in which the customer wants to change the agreement — either by paying faster, or by extending the installments for a longer period of time. In this sense, the company’s posture says a lot about its work, which brings back the question of its credibility .
The first warning sign is for the lender to ask for some kind of advance payment. This is not a practice adopted by good financial institutions, as it indicates a possible higher concern with the closing of the agreement than with the satisfaction of both parties. The ideal is to form a true partnership in this negotiation.
When a company adopts a policy, for example, of limiting the loan to something around 30% of the client’s income, the objective is not to compromise its budget. It’s no use getting a big loan and that ends up leading to indebtedness and default, something that is not in the interest of either party. And the same applies to the possibility of renegotiation. The conditions must be checked before choosing where to apply for a loan. Although it is an undesirable scenario, it is better to be cautious.
4. Payment term
The deadline for the payment is one of the pillars of good planning when you apply for a loan, but it cannot be evaluated only based on the comparison between companies. First, you must put the bills on paper and understand your own financial profile. The consumer needs to know how much money he or she earns, how much money they spend every month.
The term, then, requires you to put on the scale how much you can allocate to the installments and without extending the total period too much. After all, the longer the loan period, the higher the effective cost. This brings us to the question of value itself.
5. Instalment size
The amount of the instalment is a basic item, but it requires the same knowledge about your financial profile to be defined. After all, as much as the initial objective is to pay off the loan as soon as possible, it is crucial that the customer is able to keep this cost under control, as well as their other expenses (house bills, credit card, any financing, etc).
Keeping in mind how much you earn and spend per month, it is possible to establish a budget and find out what would be the acceptable amount of instalment so as not to hurt you when you apply for a loan. A good criterion to keep in mind is the same one mentioned above, so the ideal is that the borrower does not commit more than 30% of their salary to the payment of instalments.
6. Payment date for instalments
A point that is often overlooked when you apply for a loan is the definition of the best date (day of the month) for the payment of the instalment. The ideal is to have a margin of a few days after receiving the salary, to ensure that the loan is paid as soon as possible. So, even if the change is something simple, it’s important to make it clear right from the start that you depend on this planning.
If the payment date is weeks after the salary is received, the chances of a financial breakdown happening become greater. As with the other expenses in your budget, it is important that the loan is among the first payments — you receive and already pay your bills. With the rest of the money, you can spend the month in a more controlled way.
Keeping these tips in mind, you can define where to borrow with more peace of mind when choosing. Remember to make a plan based on your financial reality and the reputation of the companies. So, you establish some alternatives and do the research further for the best result when you apply for a loan!
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