Loans are a difficult topic for many of us. Sometimes, it can feel like they are nothing but a bad thing, so why are we even looking for one? However, the simple truth is that they are necessary for a lot of us as we go through life for a variety of reasons.
That is why I am writing this article today. My goal is to provide you with some tips on how to find the right loan for you. It might seem like an easy task on the surface, but you might be surprised by how difficult it truly is.
One: Take a Look at Your Finances
I am sure this is nothing new in terms of pointers, considering how many other articles echo it, but I think it is critical to cover all the same. Before you borrow money for any reason, you should double check your current financial situation. You see, it can play a huge part in how likely you are to get approved when you apply, as well as what your interest rates and other terms will be.
A large part of this is your credit score. It is a number (three digits) that tells lenders what sort of borrower you are. Essentially, it reflects whether you pay bills on time and how many other debts that you have. Knowing this figure is important as you proceed.
Two: Figure Out What Kind of Loan You Want
Did you know that there are many different types of loans out there? From mortgages to auto loans to personal and student ones, the options are nearly endless. Perhaps that is part of why a lot of consumers have a hard time isolating the kind that suits their needs.
One option is to check out resources like this one, billigeforbrukslån.no, that show lists of different kinds alongside the rates and terms in a list. Obviously, that is not the only choice though. If you are unfamiliar with some of the types, I recommend that you do some additional research before proceeding to the next step.
Three: Compare Your Lender Options
This is another step that probably seems quite obvious, but you might be surprised. It is certainly true that a lot of us apply this concept to our normal shopping, but what about when we are shopping for loans? It is all too easy to fall into the trap of accepting the first offer we are given.
A large part of this might be that we feel we are not able to find good rates with our credit scores. This tends not to be the case, though, so be sure that you look at a variety of lenders. There are plenty of tools out there that allow you to compare rates directly, so I would suggest utilizing them if you can! You could look at one like this.
Four: Submit Your Application or Get Pre-Approved
This step is especially important if you are looking to get a mortgage, but it remains valid for any type of loan so do not write it off just because of that. However, if you are looking to purchase a home, it is probably a good idea to apply to a few mortgage lenders to see if you qualify before you begin seriously shopping.
In general, when you decide to apply to a few different places, it makes the previous steps easier. Now, to do this, you will want to have some documents on hand. First, you might want to have your social security number memorized (thankfully, most of us already do this).
Beyond that, you might want to have any current banking paperwork ready, such as your current holdings in checking and savings accounts. The same goes for any documentation you have about current debts that you might have. Have at least two years of your tax returns ready, including both W-2s and your 1099s, depending on the size of the loan you are applying for.
The final pieces you might want to have at the ready are your employer’s details and any documentation of your current salary, as well as some details on what your plans for repayment are. If you have all of this, there is a good chance a lender will not need it all – it is just good to be prepared!
Five: Think About Your Monthly Payments and Beyond
Honestly, it is all too easy to tunnel vision on just figuring out monthly payments. I completely understand the urge to do that, considering it is often the most pressing thing on our minds in terms of finances for a budget. However, I recommend that you also look beyond as you consider taking out a loan, as a lot of people seem to rely on the possibility of refinancing.
Just know that this is not always an option, so you should plan to pay back what you have borrowed based on the terms you agree upon in the initial contract. That probably seems a bit silly to point out, but I do think it is worthwhile to point out. If you are wondering what I mean by looking beyond, though, let me briefly explain.
When you borrow money, you should always consider the risk that you are taking on if you are unable to pay it back. Just keep that in mind.