Did you know that more than 20% of people looking for a loan don’t research before applying for one? And more than 50% don’t use preapprovals to compare rates and fees from multiple lenders. That’s a lot, and you shouldn’t be one of them.
You need to do your research before applying for a loan if you want to get all of the benefits. We are going to show you the best way to apply for a loan, and we’ll guide you through the whole process.
Types of Loans – Benefits and Flaws
If you are in a need for a money loan, you should first know which types of loans exist, because not all loans are the same. And you should decide which type of loan is the right fit for you. When applying for a loan your credit is one of the most important factors, because it will determinate your approval and also loan terms and interest rates.
Car Title Loans
Another secured type of loan where borrowers can use their cars as collateral. If you choose to get this type of loan you will have to temporarily surrender the hard copy of your car title in exchange for a loan. Once you repay the loan and your car title will be returned to you. If you don’t pay back the loan your car will be repossessed.
This is a good type of short-term loan, but in most cases, it has a higher interest rate than other types of loans. It is good to know that you probably won’t be checked for credit history, so you will certainly get this loan. If you want to know more about this type of loan, visit LoanMart.
Unsecured Personal Loans
These types of loans are perfect if you need money to pay for some expense, and when a personal loan is unsecured it means that you are not putting collateral like a car or your home on the line.
Unsecured personal loans are great if you need money for a big purchase, home renovation, medical bills, or if you have a high-interest credit card debt.
If your credit is good the interest rate can be lower than your credit card, and that means that you will save money.
Secured Personal Loans
These types of loans are best for lower interest rates, but you need to offer up some type of collateral, like your car or your home. They are great if you know that you will be able to pay back the loan and that you won’t lose your house.
They are good because you will save a lot of money in interest.
But they are also very risky if you are not completely sure you will be able to pay back the loan. You are at the risk of losing your house, your car, or your savings.
A mortgage is used to purchase a real estate property. This is a secured type of loan because you put your real estate on the line. The bank has the right to take possession of the real estate and to sell it to pay off the loan if you don’t manage to pay it by yourself.
These types of loans are great if you don’t have enough savings to buy yourself a home, and you know that you will be able to pay the mortgage every month. Most people buy houses and other real estate properties this way.
The downside of this type is that if you, for example, lose your job and you are not anymore able to pay the mortgage, your house could be repossessed.
In most cases, college students pay their tuition fees with student loans. There are federal student loans and private student loans.
The better option is federal student loans because they come with lower interest rates and better repayment terms.
What You Should Do Before Applying For a Loan?
The first thing you need to do is think about everything twice. You need to be sure that you need a loan and that you will manage to pay it back. You also need to set your budget so you know what you can afford and what you will be able to pay back.
Remember you will have to pay a significant amount of money every month.
These are the things that you need to do before applying for a loan if you want to successfully apply for one:
Decide how much money you will need – Always choose the amount of money based on the expenses you are trying to cover.
Find the type of loan that best suits your needs – Never chose a loan that is not suited for your needs.
Find the perfect lender – There are many lenders out in the market, and you should do your research and chose the perfect one.
Always check your credit score – You need to do this because your credit will determine how much money you can borrow.
Always check the lender’s requirements – This will save you a lot of time because you won’t find yourself in a situation to apply for a loan that you are not eligible for.
Do your research and compare lenders – Always compare lenders because this way you will find the best interest rates.
Always read the fine print before signing something – This is pretty self-explanatory. Always read the fine print.
Gather all of the necessary documentation – Before going anywhere gather all of your documentation. This will save you a lot of time.
Apply for preapproval – Preapprovals are great because they give you a chance to see your potential rate and loan terms, they are very important before you decide everything.
Finally chose your loan type – After you did everything it is time for you to choose the right type of loan for yourself and your needs.
We hope you will find what you are looking for.
Do you want to consolidate debt? Do you need to borrow money for medical reasons or perhaps to finance a major home improvement project? It’s generally smart to find a lender who is comfortable loaning you money for the exact reason you need it.
You can search for the Bankrate Personal Loan Marketplace for different types of loans.