A loan is a major financial decision and is not made lightly. Making the move to take out a loan may be a big step, especially if you are not too familiar with the whole process. To ease yourself in, it is always a good idea to become familiar with the steps that need to be taken so you know exactly what is going on and where to go at any point. Whether this is your first loan or whether you have already taken out a couple of loans, it is good to be on top of your game. There are and will always be factors to consider when taking out a loan.
- Interest Rate
There will always be interest rates when you borrow any kind of money therefore one of the first things you should inform yourself on is the amount of interest you will be charged in relation to the amount of money you will be borrowing.
- Loan Term
The terms of any loan should be considered, as various lenders will have various terms. Some lenders may require you to pay back your loan on your next payday while another may give you the option to make weekly, biweekly or monthly payments. Lenders also offer the option to extend a loan payment but beware of additional fees. If there are any additional services that the lender offers, chances are it will be at an additional cost to you.
- Hidden Charges
Sometimes we get ourselves too far into something before we find out about any hidden fees that may be lurking. If you have any doubts about something be sure to ask.
Calculating a repayment rate before you take out a loan is necessary so you do not get any surprises over the next few years of your repayment. From there, you can decide a realistic loan amount to borrow as well as build the confidence in knowing you can afford to pay back the amount within your deadlines.
Every lender should have regulations and guidelines to follow as well as a verification process to complete. Be wary of companies who will approve you without any proper documentation or proof that you are capable of repayment. Such companies may be scammers trying to get your banking information.
- Rules and Regulations
Although rules and regulations will vary from lender to lender, federal as well as provincial laws govern them. Meeting the company’s guidelines before you apply is a must; once you sign that contract, there is little way to get out of it.
- How Much Money You Need
Sit down and think about the amount of money you actually need to borrow. It is not a good idea to borrow an excessive amount of money outside your means if you will not need it and if you will not be able to repay it. Taking out more money than you actually need may give you the feeling that you can afford more that you actually can, leading you to splurge and get yourself into financial trouble.
- Can you Pay the Money Back on Time
Set up your repayment schedule in a way that it does not collide with any other payments that have to be paid. Consider your budget and everything you have to pay such as rent, mortgage, car, phone, internet, groceries, gas etc. and plan you repayment schedule so that you are certain the money will be in your account and not used for any other of your payments.
- Check your Options
Rates will be competitive and just like anything in life you must do your research. Look into the kind of loan you are planning on proceeding with and research the best rate and repayment schedule. Once you have found what seem to be your best options, inform yourself with the lender directly.
Before applying for a loan, think about and write down any questions you may have in order to be sure you are at ease and in control of the situation. Keep your eyes and ears open for any red flags. If at any time you feel uncomfortable, there may be a reason. Always Research, inform yourself and be aware of what is going on.