A loan is no laughing matter. If you fail to make repayments on your loan or just do not take it as seriously as you perhaps should, you can cause great damage to your financial record, and in time, stop yourself from being able to get further loans, mortgages, and diminish your credit score considerably. Getting a loan is, with all of this in mind, a very serious thing, and should not just be undertaken ‘willy-nilly’. Never take out a loan if you are not confident that you cannot pay it back.
In today’s article, we are going to tell you about six things that you need to know about getting a loan. Like we said previously, a loan is no laughing matter, and before you make the decision to get one, read this page in its entirety and take the information into consideration.
Here are six things you need to know about getting a loan.
Finding the Right Provider
Before you can take out a loan, you need to find the right loan provider. There are many loan providers to choose from, and not all of them are the same (or even close). Finding the right loan provider is important. You can find out a lot about your prospective lender by reading the information contained on their website, so be sure to do that. Find out what the interest rate is, and if you can, read previous reviews to ascertain that they are genuine and do not employ nasty tactics to collect their money.
What Do You Need It For?
Well, what do you need it for? A loan shouldn’t be taken out just to fund unnecessary expenses. As we said, loans are serious matters, and thus, should be dealt with accordingly. Only take out a loan for necessary expenses and things that you personally believe warrant such a drastic measure. For example, if there are repairs that need to be made to your car or house, a loan could be your best bet, and potentially, your only option.
Your Credit Score
Before taking out a loan, it is worth checking out your credit score. If you do not have a high credit score, then taking out a loan may be a very bad idea. Some people have no chance at acceptance, but still, apply anyway, and damage their credit score even more. Lenders will perform what is called a ‘hard search’ on your credit score, which will cause it to decrease. If yours is already low and you wouldn’t be accepted, to begin with, your score will still go down, perhaps much further than it already was, which will keep it down for long.
Repayments and Your Credit Score
Once you have taken out a loan, a credit account will be reported to your credit agency. They will then add this to your credit score homepage. If you miss payments, it will show up in red, and these payments will cause your credit score to go down even further. If you do not make repayments on time, your credit score can be impacted massively, and if the reds keep showing up, your score will plummet, and eventually, the lender will report a default on your file…
A default is when you have defaulted your credit account. A surprisingly high amount of people default on loans and credit cards – don’t be one of them. A default will show on your credit record for up to six years and will be a cause for instant denial among lenders from whom you are trying to take out mortgages or future loans. Defaults are no laughing matter and can cause your credit score to reduce significantly. You do not want a default on your score, we assure you, for the consequences of a default can be very damaging to your financial future and your chances of future loans.
Rather than thinking about getting the loan, think about accommodating and making the repayments. If you cannot afford to, or do not think you will be able to, make the repayments that the mortgage broker has outlined, either negotiate a new repayment plan with them, or do not get the loan at all. Not being able to afford your repayments will put you in two of the above categories, a default or a missed payee. You must always be able to accommodate the repayments for your loans, otherwise, you should never take them out and get one.
Loans are not a joke. They must be taken with grave severity and should not be taken lightly as a source of amusement. Thank you for joining us, and please, take loans seriously.