4 Things to Keep in Mind Before Getting a Loan
A study conducted by Finder shows that 34% of the Americans have taken a personal loan in the past year. The leading reasons why both men and women take out loans are because of a car purchase, utility bills and other bills, emergencies, tuition fees, and debt consolidation.
The top three states with the highest percentage of borrowers are Florida, California, and Texas. It was also found that Gen Xers tend to take out more loans than Baby Boomers and Millennials. These loans fall anywhere between $50 to $200,000 that are either applied from banks or other financial services online or credit unions.
With all of these pieces of information, it just simply means that taking out any kinds of loan is just really a common practice in the US. If you yourself are planning to take out a loan pretty soon, don’t just get into it because everybody else is doing it.
In this article, you’ll know the 4 important things to keep in mind or to do before you get any type of loan.
1. Know Your Credit Score
It’s important that you know your credit standing before getting a loan. This will help you know or at least have an idea of the offers that you might get when taking out a loan. There are three credit bureaus that you can pull your credit from, so make sure that you check it will all of them.
A credit score of 700 and above is considered as good credit and the higher your score is, the most likely that you will be offered lower interest rates. With this in mind, if you have a score below 700, you may have to sign up for higher interest rates.
Building your credit score before getting any types of loan is just really the best thing to do to avoid paying high interests. You also should plan how and where you’ll be applying for a loan. An inquiry alone could affect your credit score, so make sure to ask about this before pushing through with any application or inquiry.
2. Know Your Best Options
If you’re looking to get a personal loan or even a vehicle loan, make sure that you don’t just visit one bank or financial services. You can check your own bank or a credit union to apply for these. Again, make sure that you ask about whether they’ll have a soft pull from your credit for inquiry. The last thing you want is for your credit score to significantly go down just because of an inquiry.
You can at least have three options in mind. Get to know the interest that they can offer you and the payment terms that are available based on your credit score. It would also be great if you do some research about financial companies that could give you a loan.
Loan Review HQ is a good place for you to check thorough reviews of different loan providers in the US, whether it’s online or not. It’s best for people who are looking for loan providers that can give them fast cash.
3. Be well-informed
If you’ve already decided to take a loan with any provider, make sure that you actually read and go through your contract. Ask as many questions as you could before even signing the contract to avoid getting tied up with a loan that you never fully understood.
Take the time to sit down and review the interest rate, how it is calculated, and how much in total you’ll be paying one the loan is done. You can also ask or options that could help you pay less interest. It’s typical that you’ll save more money if you pay your loan off early, but always check this with your loan provider.
4. Loan Management
Once you’ve already signed the contract for the loan and are already approved, make sure that you know when your first payment is due and when it is due each month. Take note of when late charges will be assessed if there will be a time that payments won’t make it on the said due.
Of course, late payments could impact your credit score but there are loan providers that do not negatively report accounts immediately. Some loan providers would allow at least 30 days of late charge period before a negative report will be submitted to the credit bureaus.
What’s important here is that you make the payments on time to keep on building your credit. If it’s possible, check on the options you have for automatic withdrawal of payments so that you won’t have to worry about making a payment each month.