Chad HarrisonMany people turn to personal loans first when they need money quickly, such as in the case of an unexpected expense. As its popularity grows, this unsecured loan is becoming more expensive than others of its kind. The interest rate is often higher, and a solid credit history is essential for favourable terms.
- Making many lender inquiries at once
When you apply for a loan, the lender will run a credit check, and it will show up as a “query” on your credit report, along with the date. Your credit score will drop as a direct result of each credit inquiry. If you have a lot of questions in a short period of time, banks may be less likely to approve your loan application or may charge you a higher interest rate.
- Concealing information about an existing debt
Lenders typically base loan amounts on the probability that borrowers will be able to continue making payments on other debts they already have. If you try to conceal this information, you’ll likely be met with loan denial or increased interest rates.
- Choosing longer terms with reduced EMIs
Loan repayment terms with a longer term often have lower EMIs, thus borrowers choose them. Keep in mind, however, that interest rates tend to go up as loan terms go longer. If your monthly payback ability allows it, the shortest loan term available would be ideal.
- Failing to verify qualifying requirements
Income, age, occupation, a strong credit score, home area, and other factors vary per lender. Checking your eligibility for the loan before applying will help you receive better terms if you qualify. Lenders use this score while evaluating your application for a personal loan on a slick cash loan website. They base their decisions on whether or not to grant the loan and the interest rate they will provide based on this score. You’re in for a rough ride if you’ve never checked your credit report.
In addition to avoiding the aforementioned blunders, thorough preparation is also essential when exploring potential sources of emergency money. Depending on your needs, there may be various possible courses of action, and it’s not always best to choose the first one that comes up. Additionally, resist the need to submit applications for loans to a number of different lenders. Instead, take the time to get organised and patiently search for a loan that adequately meets your requirements.
Chad Harrison
