Buying a car, doing a home renovation, or financing some studies are some of the main reasons for requesting a personal loan. However, in order to acquire this financial product, it is important to meet a series of requirements, such as having an employment contract or demonstrating sufficient financial solvency. In addition, taking into account other aspects such as, for example, the type of commissions or interests requested by the bank, can help this financial product not to be more expensive than expected.
1. Don’t ask for more money than you need
A few years ago, when asking for a loan it was common for the bank to offer you a larger amount than what you requested. In this way, if the initial reason for requesting it was to change the kitchen in your house, you finally ended up also reforming the bathroom, or buying new furniture. At present, the economic crisis has caused this trend to change, both on the part of banks and customers. The former no longer grant loans so lightly, and the latter request only the money they need to cover a specific purpose. And it is logical that entities do not lend money altruistically. When you ask for a loan you will have to pay back the money they have lent you, along with interest, commissions, etc., which will make the total amount due to be considerably higher than what they lent you. Therefore, when requesting a loan, adjust the amount you want to apply to the maximum and you will avoid paying more interest for it.
2. Return it as soon as possible
When the entity with which you contract a loan asks you how long you want to repay it, try to make it as short as possible. You must take into account your income and make sure that it is a fee that you can assume periodically. After that, make calculations and try to adjust the repayment term as much as you can since the longer it takes to return it, the less security the bank will have and the greater the interest. In fact, this is one of the factors that makes the price of loans more expensive. On the contrary, if you pay installments of a greater amount, in a shorter period of time, you will repay the loan before and it will be cheaper.
3. Do not delay payments
When you take out a loan, it is very important that you pay the installments within the period you have set with the entity, without delaying a single day. If you comply with the payment later than the contract provides, the entity may penalize you by applying late payment interest, which is usually much higher than ordinary interest. If this situation is repeated, or you stop paying any monthly payments, your debt will not disappear, but will increase and your assets or bank fees could be seized. Therefore, before requesting a loan make sure that you can face the payment of the loan and above all, comply with the payments within the expected period!
4. Justify the expense
When you ask for a loan, most entities will ask you what you intend to invest said money , since it is information that provides them with certain security. It is not the same as you want a loan to settle previous debts, than to buy a car. Therefore, most entities offer specific loans for the financing of a specific purpose, for example the purchase of a car, home renovations, studies, etc. These products have specific conditions and advantages. However, in order for the bank to grant you these benefits, you must prove with the corresponding documents that the purpose of the loan is as indicated.
5.Do not resort to “fast money” and without guarantees
When you apply for a loan, entities usually take a few days to confirm that you are eligible to lend money. For this they will ask you to provide guarantees that show that you can return it. If you are an employed person, the most common is that they ask for your payroll, which must be of sufficient income, and your employment contract, which may require it to be indefinite. If you are autonomous you will also have to prove financial solvency through invoices, bank statements or other documents.
However, there are some entities that offer “fast money” and without the need to provide payment guarantees. You should be careful with these types of loans, since they could charge you higher interest or commissions than other entities.
6. Look at the APR
When you take out a loan, you not only have to pay attention to the interest you are going to be charged, but there are also other conditions that can make your loan more expensive. Thus, when you ask for a loan or a loan, many entities may require you to hire certain products such as insurance or cards, or charge you certain commissions that can make the product cost much more expensive than it seemed if you only took interest into account. Therefore, when you are going to take out a loan, look at the APR (Annual Equivalent Rate), which is the one that includes the total cost of the loan, including commissions, interest, expenses and commissions.
7. Compare Personal Loans
Without a doubt, the best option to get the most suitable loan for each person is to compare the different products that are available in the market and offered by the different entities. Select the amount of money you need and fill in the questionnaire data and in a few seconds you will be able to know the loans that you have at your disposal. In this way, you can choose the loan that suits you best and avoid paying more money than necessary for it.