Did you know that loans date all the way back to Ancient Greece and Rome? It’s true – in fact, many civilisations had their own forms of loans, and we can see this throughout various classical societies. Today, loans are one of the main ways in which people see themselves through financial difficulties or acquire money they need for a personal project. If you’re setting out on the journey of taking out a loan, there are some things that we think you should bear in mind. Here are 10 tips and tricks for taking out online loans.
1. Check your credit rating
The first thing you need to do – before you even think about taking out an online loan – is to check your credit rating. This is a statistic that will determine whether or not most lenders will be willing to lend to you. A poor credit rating indicates that you aren’t trustworthy in the eyes of lenders, so they will be much less likely to lend (although there are lenders that specifically deal with poor credit loans). Services like Experian and Credit Karma can help you check your credit rating.
2. Pick a good lender
The lender you choose for your online loan is just as important as the terms of the loan itself. Different lenders will have different stipulations for their online loans, so it’s important that you do your research. Don’t be afraid to talk to lenders ahead of actually putting in an application; if they’re legit, they should be happy to explain to you who they are and what they’re about. A good lender will put all of their cards on the table as soon as you start talking to them.
3. Read reviews
You can’t always trust online reviews. That’s a caveat you should apply to all areas of life, but nowhere is it more true than in the world of online loans. After all, many reviewers may simply be angry because a lender didn’t do something that wasn’t in the terms and conditions, which they should have read thoroughly beforehand. Still, if you see a preponderance of negative reviews for a particular company online, it’s worth going through them to see why that might be.
4. Shop around
Before you pick a lender, make sure that you’ve looked everywhere to get the best possible deal for yourself. As we said, different lenders have different terms and different approaches, so just because one of them looks particularly appealing to you, that doesn’t mean you won’t find another lender that could do the job better. This goes for mortgage lenders, and it goes for lenders of any other type of loan as well. Don’t settle for less!
5. Talk to your lender
Before, during, and even after the process of taking out your loan, it’s important to keep communication channels with your lender open. This is helpful when configuring a repayment plan, but it’s also good for asking any extra questions you might have, or allaying any fears that may have arisen during the application process. Again, a good lender will be friendly, open, and willing to talk to you about any concerns you raise with them.
6. Structure your budget around the loan
You should be planning your budget around the loan you plan to take out. Restructure any other repayments you might have, cut back any expenses that you might need to remove, and plan your new budget around loan repayments, because missing them could have dire consequences for you. If you haven’t already built a budget, then this is a great opportunity to do so; planning your finances is a good way to ensure you’ll always have the money to make repayments.
7. Read your applications carefully
Whichever lenders you apply to, it’s important to make sure you’re reading all of your applications very carefully. If you make a small mistake, it could be the difference between approval and rejection; misplacing a single number or letter could mean a lender doesn’t understand an address or misreads your financial details. If you need to, don’t be afraid to get friends and family to check your application with you so they can spot things you’ve missed.
8. Don’t apply all at once
Sometimes, you might get rejected for a loan application. There could be a number of reasons for this, and the most important thing is not to panic; it doesn’t necessarily mean you won’t be approved for a different loan. However, it’s important not to apply for loans in a big chunk. Try to space out your loan applications so that you’re applying with different lenders at different times. A batch of rejected applications all at once can send bad messages to lenders.
9. Build a credit history
If you’re rejected because you don’t have a good credit history, then it’s time to start building a new score. You can do this in a number of ways. Small things, like adding yourself to the electoral register, can help, as can paying bills on time. You can also apply for specific credit builder loans or cards, which are specifically designed for the purpose of helping you to pay loans back. They work differently to regular loans and cards, though, so you can’t use them for quick cash injections.
10. Think carefully about applying
Before you sit down and apply for a loan, make sure that it’s definitely the right choice for you. Not everyone should apply for a loan; if you’re already making repayments on other loans and struggling with those, for instance, then that would be a good reason to avoid taking out an entirely new loan. Similarly, if you don’t think you’re going to be able to make repayments, then you shouldn’t take the risk, because in the end, you’ll be worse off.