Did you know that there are more Americans with a student loan than there are Canadian citizens? The total amount of student loans (from a total of 40.000.000 people), is growing for 3,000 USD per second.
It seems that the time is overdue for all of us to get a financial advice. Well, maybe not all of us, but a couple of dozens of millions at least. However, if you are in a situation where you need a loan just to get a loan advice from a professional – look no further. Although this article won’t make you any richer in your preferred currency, it will make you richer in knowledge.
In this article we are going to share some tips that will help you to choose the right lender and a loan which is adequate to your earnings and life situation.
Check your credit rating before contacting lenders
Many people get refused for a loan because of their bad credit rating. That’s one of the reasons why you should always check your credit rating beforehand, and learn more about all the payment plans that you are eligible for.[irp]
Another reason for this is because credit bureaus often make mistakes and you might easily get refused if they hand your lenders an irregular score. Knowing that this is actually a common issue will certainly help you to get prepared, and if you spot any irregularities in your credit score, you will have enough time to correct them.
There are three big credit bureaus in the United States that collect credit data. These are: TransUnion, Equifax and Experian. You can contact them directly through their website. Other way that most lenders use goes through the Fair Isaac Corporation. This corporation provides you with their FICO score, for which you will need to signup to MyFICO website.
Do an elaborate research
A quality research is the most important part of choosing the right loan. Each loan that looks appealing should be checked for its interests, fee structure, repayment due dates and various other features. In simple terms – you should take a closer look at the entire picture.
For example, if you are considering a plan that has a lot of features, you need to check whether you will need to pay for all of those through higher fees and interests, ad examine every single feature individually.[irp]
Structure is also a very important part of the loan’s payment plan, especially if you are buying a mortgage. Loan’s structure needs to be suitable for your current financial situation. Since first loan installments often represent a huge burden on your family’s finances, you should always look for plans that are easily manageable during the first few years.
Size of the deposit can also be a huge drawback. But even loans that doesn’t require you to pay too much money in the beginning, will charge you lenders mortgage insurance. So a deposit can be perceived as a necessary evil.
Home loans: Finding the Right Lender
Rule of the thumb when it comes to loans is to always shop around. Always consult your friends, relatives and colleagues that already have taken a loan from a certain lender, but also have in mind that loan terms quickly change, and that you might get a completely different deal.
You should visit lenders’ office and feel free to ask about anything that seems unclear or suspicious to you. They are obliged to provide you with all information considering their loans, interests and fees. Some of the things you should check when taking home loans are:
- Do they allow you to switch to bi-weekly payments’ plan?
- Are there any prepayment penalties or exit costs?
- Are there any break, discharge or settlement fees?
- Ask them to show you loan’s comparison rate;
- Are there any hidden variable fees?
Car loans: Pre-approval, Negotiation and Paperwork
From the moment you get pre-approved you can start negotiating a better deal. If you are taking a car loan for example in this stage you can negotiate a smaller price for a car or a truck you want to buy at your dealership. Dealers will definitely offer you loans with a longer payment plan, but in most cases these tend to be more expensive on the long run, so don’t take them if it’s not necessary.[irp]
They might also offer you different add-ons, including: VIN etching, longer warranty and many other things that can add up on your loan, so always do a good research beforehand.
In the end be sure to finalize all paperwork and take all important documents home. Keep them on a safe place, because if you lose paperwork, you might need to take a bonded title, for future registrations or ownership transfers.
At the end…
Doing an elaborate research before taking a loan protects you in many different ways. Also remember to read all the paperwork carefully and know what you are getting into, because every mistake in the loan choosing process might put a burden on your finances for many years to come.[author title=”Howard Bell” image=”https://pbs.twimg.com/profile_images/707536348500992001/idUstg_h_400x400.jpg”]Editor at tech-oriented blog Technivorz. Follow him on twitter @howbell42 [/author]