5 Common Mistakes When Taking A Loan

We all had our good or bad experience when it comes to accessing financial help. The trick is to improve your expertise, learn and from your mistakes and even better, learn from other people’s errors. Because, when it comes to finance every misstep you make is going to cost you money. Don’t be worried if things seem to complex, there are good chances to find here the solution to 5 most common mistakes that you could easily avoid.

#1 Make a proper research

When it comes to getting a loan doing your ‘homework’ is important. The struggle of choosing the best deal for you between thousands of offers is going to pay off your time and effort. The first mistake that one can possibly do is to take the first loan that comes to your attention. Constructively compare offers, consider your needs and shop around a little bit before taking a final decision. Consider rate interests, repayment options, terms and condition that you will have to honor and first of all, eligibility criteria. Besides the entire loan regarding aspects, don’t overlook taking a glance at the lender’s history and financial stability.

#2 Loan’s interest rate

Competition is progress and the constant match between lenders is a great financial advantage for the costumers. Do not settle immediately for the first interest rate you see.  The bitter competition gives you the opportunity to negotiate better conditions for your personal loan or simply consider other offers. The best way is to grab that advantage is to be prepared. Thing of what you need the loan for, what are your budget limits, if you are comfortable to eventually secure the loan with personal assets and previously check out for similar offers.

#3 Anticipate your credit score

There are multiple online applications that can give a firs image of how your credit score is going to be evaluated. It is important for your firs or even a subsequent loan experience to wittingly know your value. The credit score tool can differ from lender to lender but the basic criteria are similar and it is good to consider the impact that it could have on achieving a nice interest rate or other extras. If you achieve a good credit score all you have to do is finding the best lender. If your score is not that good try to improve some aspects rather than looking for institutions that offer finance for people with substandard score. It will get you pay way too much for your loan.

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#4 Be rigorous with payments

A loan approving does not mean that the process has ended there. It is only a first step for you to take in consideration. After all that effort and trouble is surprisingly easy to end up forgetting your responsibilities of repayment. It is usually a ‘first time ‘mistake but can be decisive for your credit history. The missed payments are always registered and will impact on your future credit score. Applying for a loan that gives the possibility to choose a suitable payment day accordingly to your cashing period is an important aspect for you to keep in mind as well. Mark it down on your calendar for a constant reminder or even better set up a self-activating transfer to it ease off your head.

#5 Reason your budget

The closer to reality the better! Borrowing money is not a game considering the repayment process and the interest rate that comes along. For sure the lender will forecast your repayment capacity but take a moment and make your own math. A common mistake is to block a great part of your income to repay money that maybe you do not needed in the first place or you could not afford.

The golden rule is to take your time, prospect and not hurry in taking a decision that could cost a lot on the long run.

Written by Ellen Royce

Ellen Royce is a Colcester-based web writer. Having graduated the University of Essex for creative writing and traveled the world, I've developed a passion for technology and culture - how the two interact and change each other, how the society changes in the 21st century.

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