Life is not always smooth sailing. It will always have its ups and downs. To overcome the hurdles of life, you often need additional finances to tide you over troubled waters. That is when you need to tap the many resources you have at your disposal. Most people go for a loan in order to fulfill their financial requirements. Before you apply for a loan, there are a few things you need to keep in mind. Your loan approval depends on a lot of factors. When and how you apply for a loan is very important.
Check the Interest Rates
Whenever you need to apply for a loan, you must check and compare the interest rates of the various lenders. Opt for the lenders who offer the minimum interest rates. There will be others with attractive offers, but you need to read between the lines. Do thorough research before applying for a loan, and make sure that you wait for the interest rates to come down before you fill in the form. There are times when the interest rates shoot up; that is when you should never apply for a loan.
Look Up Your Credit Rating
Your credit rating is a decisive factor in loan procurement. Your credit rating depends upon how regular you have been in paying your EMIs. If, due to some financial constraints, you have been unable to pay your EMIs regularly, this will adversely affect your credit rating. The higher your credit rating, the better your chances of getting your loan sanctioned. A higher credit rating also ensures a loan at lower rates of interest for a longer tenure. It is always better to try and stabilize your credit rating before you apply for a loan, or you might need to research other loan options.
Tap Other Resources First
Only opt for loans when all your other resources are exhausted. See if you have any equity or any other option or resource that you can tap without having to pay the exorbitant interest rates and processing fees that are charged by the lending banks and other financial service providers. Even if you do have to go in for a loan, the amount should not be more than your capacity to repay. You not only end up incurring heavy penalties due to this, but it also adversely affects your credit score rating. The financial advisors from LendingBee.com.sg have some very sound advice about the things you need to keep in mind when you apply for a loan. Mostly, people are unaware of the formalities and intricacies involved in loan applications. Following this advice can help in procuring the required loan.
The Right Time
The time you apply for a loan matters a lot for its approval. The first week of the month is the best time to apply for a loan. Most of the lending businesses filter the loan documents and applications in the first week of the month. If you apply somewhere in the middle or end of the month, you might encounter delays in its approval. In case you are unable to time your loan to the first week of the month, you can adopt other methods to speed up the loan process. Making a checklist of the important required documents is an important step in speeding the process of loan approval.
Keep the Tenure Short
The loan tenure should always be short. When you opt for a longer tenure, it allows you a lower EMI. What you need to remember is that shorter tenures have a lower interest rate as compared to longer tenures. At times, when you are unable to pay a higher EMI, you need to go in for a longer tenure. In such cases, it is better to increase the EMI every year with an increase in salary.
Don’t Submit Forms to Multiple Moneylenders
Submitting forms to multiple moneylenders at the same time will adversely affect your credit score. The loan applications will generate requests for verifying your credit scores. Such requests initiated by lenders are called hard inquiries. Your credit report has an inquiry section that registers all the hard inquiries about your credit score. When you submit multiple loan applications in a short time period, it adversely affects your credit score. So filling in multiple loan application forms in a short time should be avoided at any cost.
Financial emergencies are part and parcel of life. There are a number of ways in which you can overcome them. One of the most common options is a loan. Following the advice in this article will help simplify the difficulties encountered in procuring a loan for your emergency needs. So follow this advice and procure your loan easily.