How to Be Smart When Applying for a Loan

There will be some occasions in life when you will need financial assistance. Once you reach a certain age, you might be less inclined to ask for a loan from the bank of mum and dad, and start to wonder where to find the best proper loan for you. While applying for a loan is not all that difficult (provided you meet the minimum criteria of the financial provider), you shouldn't simply try your luck. To stay on top of your financial affairs and receive the best loan for your needs, you need to be smart. So how can you be smart when looking for a loan?

Where to Start

You might want to first look into a loan (or even an overdraft) with your existing bank or financial institution. They are able to view your accounts to see if the funds that are paid in are sufficient to make the necessary repayments. Sometimes the loan or overdraft can be granted without a formal credit check, and the funds are immediately available. This might not be suitable if you only wish to borrow a small amount, since the minimum amount on offer might far exceed your needs. There might also be penalties for early repayment. This means you need to shop around.

Shopping Around

While you should shop around for the best loan, you should not make multiple applications in order to see who will approve you first. Each application is logged on your credit file, and multiple applications can damage your credit rating. Your credit file does not register whether each application was approved, and so multiple applications can make it look as though you could be financially overburdened.

Flexibility and Fine Print

Check the flexibility and fine print of any potential loan. Is the interest rate agreeable to you? Are there any hefty fees for late repayments (if the worst was to happen)? These two key aspects of a loan might make you want to look elsewhere. You should look for a loan that has the flexibility to change the monthly repayment day. This is extremely helpful if you were to change jobs, meaning the date you receive your salary might change.

The Old Fashioned Route

If you are unable to obtain traditional financing for whatever reason (or simply do not want to take out an unsecured loan), you might wish to take a more old fashioned route and pawn something. The items in question can be held as collateral, and then funds are made available to you, generally as instant cash loans. If you are unable to pay the funds back, the items are sold. While you do risk losing the items, you have the security of the collateral.

It's not difficult to be smart about applying for a loan, and it's well worth the minimal effort to ensure that you find the best possible match for your needs.