How to take a loan

Have you found yourself in need of a large amount of cash ? Whether its for a sick relative or to take advantage of a business opportunity, your most likely option is to take a loan. 

Of course you probably have asked your friends, relatives or even donations for money  but what if its still not enough ? A loan might be your only way to a better future. Still, you must be careful and cautious. There is a lot of things to do and dangers to avoid so let’s go through some crucial information and  steps to take a loan

1.  Where to take a loan?

There are many placesfor people to get loansfrom and also a variety of ways to secure it. You can find those places online, in newspapers or through family connections to find ones. But do remember to enter a place with a good reputation and history or at least you can be certain about its reliability. Don’t judge a book by it cover. A big and flashy place doesn’t mean it’s safe. Beware of scammers. Usually financial institutions and banks are your best bets. These places require plenty of qualifications and report but your size of loans and interest ratesare often better. You could also try payday advance but be mindful, though easy to get but the interest rate will be considerably higher.

2. Types of loan

There are many types of loan. Do some research about them and pick the ones that suit you the most. For most of the time, your loan will be either secured or unsecured loan, each come with its own pros and cons:

·      Secured loan

With this type of loan, your lender will require you to share the risk with them. This means in order to get a loan approval, you have to produce collateral, preferably your house or your car. Examples of this type of loan are mortgages and car loans. But with these type, your size of loan will be better than unsecured loan and the interest rate will also be lower. Still, if your payment is late or incomplete, your collateral will be taken by the lender, so you should be very careful.

·      Unsecured loan

You don’t need to provide the lender with any collateral. If you payment is late or incomplete, you property can’t be taken. Still, the size of this loan is small and rely a lot on your credit history. The interest rate will also be higher due to the risk the lender has to take.

3.  How to apply?

You need to prepare all of the documents your lender requires. Usually your financial report and background history are among them. This provide lender with information about your debt, you annual, income, account balance, your numbers of employments, etc. You may also tell them how you can pay back the money or the directions of your business.

Size of the loan

Calculate the amount of money you need precisely, not too low not too high. This shall help you narrow down your option but you also ick a number within your ability to pay it back.

Credit score

This is a number that help the lender to make a decision about the size and the interest rate of your loan. Usually, the lenders will provide you with a range of scores that correspond to how much of a loan you can take. You can take a loan even with a low score but the size of the loan will be small and the interest rate will be high, so do pay attention to this.

Income

A stable annual income is a major plus within the eyes of lenders. The more stable it is the more chance of a favorable loan is secured. I’m talking about the interest rate, time frame of payment, size of the loan, etc.