Applying for a loan is something that should be done only once an individual has taken some factors into account. One of the key factors is affordability. No lender will be willing to provide finance to a borrower who has no way of guaranteeing that they will afford to make repayments.
Janine wants to apply for a personal loan to help pay for renovations on her home.
Some things to consider before taking a loan:
Affordability.- Loan applicants need to have a form of income. If not, having collateral available to put up as security in exchange can be helpful. Janine should consider the ways in which she could lower the amount of risk she poses.
Credit Score – This provides a snapshot of how well you have handled your previous credit arrangements. For Janine, who has an excellent credit score, she can expect to get more favourable loan terms.
Loan Amount Required – The good thing is that Janine knows exactly how much she needs to finance her renovations. This means that she has a better idea of how much she will be paying overall.
Application Criteria– It’s key for loan applicants to apply for loans once they know all criteria that will be considered. This can help to avoid wasting time.
Interest rate – The interest rate may be higher, depending on the type of loan applied for.
Type of loan- Personal loan can be used for multiple reasons, such as consolidating debt, paying study fees or paying expenses off.
Fees- The fees are one for the most important things to consider before taking a loan. There may be initiation fees that apply, which ultimately add to the total loan amount.