A broken down car, an unexpected illness, an emergency trip. We all find ourselves in this tight spot at some point. Maybe you tried everything you could, from selling your possessions to borrowing from a friend or family member, but nothing adequate has come through.
It’s at this point that you’re forced to think about getting a loan. Depending on your financial history, this can be a little scary. Here’s an overview of what you should consider.
Before You Get a Loan
Before you speak to any lending institutions, take a good look at your financial life. The first feature is your credit score, which is a good indication of whether or not you’ll be approved, as well as the amount you’ll be eligible for, and what kind of interest rate you’ll be offered.
From there, assess your DTI. Your DTI is your debt-to-income ratio, and it helps you and the bank figure out how much, if anything, you’ll be able to start paying back once you get the loan. For instance, if you have very little left over after you’ve paid your rent, insurance, and utilities, a lender may not have great confidence that you can pay them back in a timely fashion.
If you need a sizable loan, collateral is another consideration. Any home equity, owned property, savings, stocks, and bonds can be collateral, depending on who you’re borrowing from. While these can mean that you’ll be approved for more money, it also means you can lose it if you don’t repay.
Finally, you need to identify your safety net. What will you do if another emergency happens, threatening your ability to make your monthly payment? If you’re not using collateral, things like the sale of property or home equity could be used for this.
Getting a Good Loan
Knowing as much as possible about your credit, history, and ability to repay is important. Now, it’s time to shop around. Whether you go to your usual bank or www.kingofkash.com, make sure that it’s not the only lender you’re hitting up.
Seek out details from no fewer than three lenders. If you are looking for a loan online, be very careful about who you choose, keeping an eye out for key warning signs of a predatory lender.
Once you have the rundown on your top three, dive in for a closer look. What are the interest rates? Are you being asked to pay fees up front to get the loan? The terms can be more specific than you realize. For example, some loans make it mandatory that you pay your installments off directly from a bank account. Speaking of that, you’ll also want to confirm that the loan does actually come with an installment agreement. This allows you to pay it back incrementally, as opposed to all at once.
Loans are all about fine print and unexpected details. They can be an absolute blessing in your time of need, or yet another heavy cross to bear. As long as you perform due diligence in assessing your finances and choosing the right lender, you can still come out on top. Repay that loan on time, and you can even improve your credit, making future loans less nail-biting to secure. Do you think it’s worth getting a loan considering as well that it’s the only way out? Let Us Know what you think!