Credit is much more readily available now than it ever was in the past. We have come a long way in the last number of years. We can obtain credit to buy our houses, our cars and it is also available for home improvements, large purchases, and pleasurable activities. We can even obtain credit to tide us over until the next payday.
If you do borrow money however, it is important to realise that you are signing a binding agreement which obligates you to make payments according to what was agreed as part of the loan set up. Once you have signed the paperwork, you are committed and there is no going back or changing your mind, so you have to be very sure that you are making the correct move.
Prior to taking out your loan, you may wish to spend some time reflecting. A loan will always come with interest attached, so any money you borrow will involve you paying back more than that sum that you borrowed. Try to be measured in your decision by considering whether you really need the item or service that you are borrowing for or whether with a few months of saving, you could purchase it without having to take out a loan.
If you have decided that your purchase or service can’t wait and you are planning the loan, there are a few things to consider first
Payments
Your loan will require that you make regular monthly payments and you must make sure that you will be able to keep up the payments for the duration of the loan and that would mean that your financial circumstances will have to be fairly stable. Your outgoings should not exceed your income and in fact, there should be enough left over, not just to pay for the loan but a bit extra on top of that. Examine your circumstances and the reliability of your current financial position prior to deciding what you can afford. Are your circumstances stable or are they going to be subject to change, in which case, will that be during the duration of the loan and what will that mean for your affordability? It is really important not to take on an amount that will stretch your budget each month. That can become tiresome if you can’t afford to do much because you are left paying a loan, so consider carefully and remember, you can always add to the loan at a later stage. So, weigh everything up carefully before proceeding.
Secured vs. Unsecured Loan
Once you have decided that the loan is for you, the next step would be to decide what type of loan you require and you would be choosing between a secured or unsecured loan. The difference essentially is that with a secured loan, you are providing something as collateral to the lender. If your loan is for a car or a house, then your car or your house would be the collateral but if your loan is for other reasons, you could offer up some collateral as security for your loan. It does mean however that if you default on the loan, the lender has the option of selling your assets to recoup their losses. An unsecured loan is another option and that means that the lender is lending to you on the ‘promise’ that you will pay. They will look at all of your circumstances and decide whether that is something that they would be prepared to do.
Preparation
When you apply for a loan, you will be asked to complete an application form with all of your personal details such as your address and contact details, date of birth, etc and if you are accepted in principal, you will then be asked to provide documentation. That documentation will include ID, utility bills, proof of salary, bank statements, etc. The lender will also want to check your credit status by running a credit check. You should prepare by making sure that everything is in order, your bank statements should not show you to be overdrawn all of the time, if you are, the lender may assume that you cannot afford the loan. You should also check your credit file and make sure that all of the entries are as you would expect them to be. Your credit file details all of your financial interactions and if you have defaulted on loans before, you may not be accepted, it will be for the lender to make their judgment. If your credit history is very poor, you may wish to take steps to improve it first before applying for a loan. By getting your credit file in order, you are putting yourself in a much more competitive position for lenders and will have access to some of the better interest rates on offer.
It is always an idea to keep your credit card bills to a minimum, you do not want to look as if you are having to rely on credit each month to keep you afloat.
If everything checks out, it is then time to choose your lender, but how do you do that if you are looking for a quick loan. Your lender has to be reliable and trustworthy with terms and conditions which are transparent and fair.
Family and Friends
You could start here by asking your family and friends for recommendations. Search wider and ask your social media friends or maybe ask locally. If your local community has a social media page, you could also use that. Make a short list of the lenders that are mentioned with a view to checking them out.
Online
An online search is often worthwhile and it can produce a number of results. You are looking to have a reliable loan company but you also want a competitive quote as well, so look at the rate of interest that are on offer for the amount that you wish to borrow. Some of the lenders will have payment calculators which will allow you to accurately calculate the cost of your borrowing.
Use all of the information to obtain a short leet of lenders that you wish to check out. For residents in New Zealand, QuickLoans is worth checking out, you can do that here www.quickloans.co.nz
Reviews
A useful way of checking out your lender is to look at their reviews, not just the reviews and testimonials that they provide on their website but the reviews that you can obtain online. Don’t focus too much on the individual complaints but instead, look at the overall picture.
Application
What is their turnaround for this process? If you are looking for a quick loan, this would have to be fast and this could be a deciding factor for you. A speedy decision is to your advantage as you learn where you stand very quickly rather than having to wait a few days to find out. If you are not successful in obtaining your loan, try to find out why because there is no point in applying to other lenders until you know what has caused the problem because they may flag up the same problem. It is not good to keep approaching lenders and have them enter a footprint on your credit history. Too many can indicate to lenders that there is an issue and it could even have them wondering if you already have too much in the way of borrowing.
Type of Product and Cost
Look at your ‘short leet’ of lenders and check out the products that they have on offer and the cost of borrowing for your loan amount. Check their website for information and generally to get an impression of their integrity. Are their products clear and are their rates transparent? Do they offer information on their lending criteria, their application process, what would happen if you wanted to pay your loan back early or what are the penalties for late payment, you want to be able to cover all bases.
Customer Service
A good way of checking out a lender is to call their customer service department. How quickly did they answer your call, or did they answer your call or were you left holding on? How quickly did you get through to the correct department? Were the call handlers efficient and did they seem to have a good deal of knowledge? It is important that a customer service department is easy to call, there is nothing worse than calling knowing that you will be on the phone for a half hour and still not have your question answered, so check that out too.
Flexibility
How flexible is your chosen lender, will they allow you to add to your loan and will they be prepared to work with you to access the correct product and should anything happen they will work with you to achieve a mutually satisfying solution.
With any type of borrowing, make sure you carefully calculate your affordability, prepare for the process and choose a thoroughly reliable lender with a good reputation.
