Five Things You Should Know Before Applying for a Loan
There will always come a time when the need for quick cash arises. What if the delivery of your elegant one piece jumpsuit and amazon sterling silver earrings unexpectedly arrives earlier than scheduled and after paying the electric and water bill yesterday, where in the world can you get money for that impulsive fashion splurge you just did a few weeks back? Before applying for a loan to cater to unexpected bills, here are five things you should know to help you decide.
You should know that there different types of loans. Be sure to apply for the loan that applies to you so you can make the most out of it. The types of loans include: personal loan, business loans, student loans, mortgages, equity loans, and auto loans. It is important to informed about the details of the kind of loan you are applying for so make sure to do some research on it.
Interest rates are important. It helps determine the total amount that should be paid back. It’s best to pay attention to current interest rates and shop around for the best possible one. Also, you should be mindful of hidden fees. It may not increase your interest but it may increase your monthly dues. Before signing or agreeing to anything, be sure to ask about any hidden fees to avoid being surprised on the day you have to pay. Examples of these fees are underwriting fees, administration fees and appraisal fees. It may not increase your interest but it may increase your monthly dues.
Don’t forget about the length of loans. Different types of loans are set up differently so it’s wise to discuss about your options on length loans with your bank or financial adviser. On top of that, you must be aware of a thing called “prepayment penalty”. This is a fee collected from you if you you pay off the loan earlier than scheduled. Before paying off a loan, inquire about this first.
Next up is the down payment amount. There are loans that don’t require down payment (but may use collateral instead) but it’s quite beneficial to you to put some money as down payment. This may help lower your monthly payments. To know more, you may contact your financial adviser. Lastly, assess your current financial situation. This is the most important factor to determine whether you can or cannot apply for a loan. Take note of your monthly and yearly expenses to understand how much you can afford as this can help you decide on a loan amount.