| Confused on what to consider when applying for a loan? Whether it's auto loan tips, home equity loan tips and mortgage loans, here are some tips that can help you get approved.
Loan Tip 1. Review Your Credit Score and Report Before You Apply for a Loan.
Many people skip this very important step – don’t be among them. Before you apply for a home equity loan, auto loan or any loan you should have a look at your credit report. There are three agencies that collect information about your credit use and history. These are TransUnion, Equifax and Experian. It is a good idea to get a credit report from each agency so that you don’t have any unpleasant surprises. You are entitled to one free report annually.
Your credit report is accessible immediately and securely via the Internet. You may also choose to receive copies by mail. Review these carefully for information that is not accurate. If your report contains information that is incorrect or that you dispute, you must address your concerns to the appropriate agency in writing. Request another copy after the matter has been corrected or settled to be sure that the contents of your report are accurate. Taking time for this important loan tip can help you put your “best face forward” and increase your chances of securing a car or home loan.
Another loan tip, it is a good idea to know your credit score. This number is also referred to as a FICO or Beacon score. Scores generally range from 350-850 and give lenders an objective picture of the level of risk they should anticipate when making a home ar auto loan to you.
Lower scores suggest higher risk and are more likely to result in an application that is either denied or granted, but at a very high rate of interest. Higher scores tell lenders that the applicant is less of a risk. These applicants can usually expect successful loan applications with favorable interest rates.
Why Does this Matter? Borrowers with lower credit scores often pay several thousand dollars more in interest on car and home loans. Lenders charge for accepting the risk.
Loan Tip 2. Know Your Total Loan Cost
Too often, borrowers consider only their monthly payment amounts. It is also important to understand how much money you will repay over the life of the loan. Depending on fees and interest, you may ultimately repay two or even three times the asking price for the house or car. Many sites, such as bankrate.com offer loan calculators that can help you get a handle on how much that loan will really cost you.
Loan Tip 3. Know your Repayment Terms Before You Sign the Loan Contract
Although it may seem like a hassle it is absolutely critical to read each of the loan documents before you sign. Carefully reviewing each document can help you learn about potentially troublesome loan terms such as pre-payment penalties, excessive late fees or balloon payments. Following this loan tip may also help you avoid repossession or foreclosure.
Whether you're in need of car loan tips, home loan tips or mortgage loan tips, here are some final loan tips to ensure you're getting the best loan for your needs:
- Ask questions about language or terms that seem unclear
- Don’t be afraid to renegotiate or ask for the terms you want
- Be willing to walk away from the table if you are not comfortable with the terms of the loan
|
