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8 Questions to Ask When Applying for a Loan

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Taking out a loan comes with a lot of responsibilities so it is important to do research carefully. There are various types of loans being offered online. Spending time to determine your financial needs and asking yourself some questions can help you to choose the right loan.


Do You Need The Loan?

The first question is whether you need the loan. You should only apply for a loan for necessary expenses. For example, you need money to cover grocery expenses. But you probably don’t need to get a loan to pay for a vacation. It is not worthwhile if you have to be burdened to visit your favorite vacation destination.


How Much Loan Amount Should I Apply?

The short term loan lenders set the maximum and minimum amount of the personal loan. However, the loan amount that is approved to you depends on your credit rating. A personal loan is the best option if you want to consolidate your credit card debt or cover expenses that you did not expect. You should only take out a loan on the exact amount you need. If you borrow more money than you need, you can end up with more burden than you need. You can find out how much money you need to borrow by calculating your debt and expenses. 


How Long It Takes for the Money to Be Released?

There is a waiting period between the time you apply for the loan and the time you receive the funds. It can take up to 2 – 5 days for the loan to be processed. During this time, the lender will review your credit report and the documents that you attach before approving the loan. After your application is reviewed, you can expect the funds to be released in the time frame of 1 day to 3 weeks.

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What Kinds of Documents Do You Need to Bring?

Besides, you also need to know what kinds of documents you need to bring. Some of the documents you need to bring are your social security number, employment information. The lender will contact you if they need any additional documents for you. The lender will want you to verify your identity information, social security number, and income proof.


What is the Credit Score Requirement?

The credit score is the main factor that the lender will consider when approving your loan application. The credit score shows how responsible you are in making a repayment. You may want to request a free credit report to check your credit score. The credit report is free to request once every 12 months. If you notice any inaccuracy, you can dispute it.


What is the Interest Fee?

The interest fee of the loan can affect your decision to borrow. Usually, the personal loan will come at a fixed and variable rate. With fixed interest, you pay the same amount every month. A variable personal loan has a monthly payment that slightly fluctuates. Borrowers with good credit will qualify for a low-interest rate. If you have low credit, the interest rate you get can be in the higher range. You can improve your credit score to enjoy a lower interest rate. 


Do You Understand the Repayment Plan?

It is important that you fully understand the loan repayment plan. The monthly payment depends on the loan amount, interest rate, and loan term. You need to know about the due date of your monthly installment. You need to make sure that your repayment plan is set at a rate that you can handle. Besides, you should also ask if there is any early repayment fee.

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Does It Allow Cosigner?

Some loans allow you to use a cosigner. With a cosigner, it is easier for you to get a loan. In the event something happens, the cosigner will be helping you to make the payment. If you use a cosigner, make sure he knows that he will be responsible if you become delinquent in making payment. If you choose to sign up for a joint loan, you have at least one other person to help you in paying the loan.

7 Factors to Consider When Applying for a Loan

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Applying for a short term loan could be the solution to your financial problem if you have a job and can afford to pay it back. The loan application process has been made easier with many lenders now offering their loans online. The approval process is faster and you can borrow the same amount as when you borrow from the bank. The following are 7 factors to consider when you are applying for a loan.


  1. Check the Requirements

The first thing you want to do is to check the requirements for the loan. The most basic requirement is that you must be a US citizen and be at least 18 years old. There is also a credit score requirement you need to meet. In a loan comparison search engine, you can easily see whether the loan requires a good, fair, or average rating. The short term loan lenders will check your credit history which can affect your credit score slightly. 


  1. Loan Amount

Next, check whether the lender offers the loan amount you need. You may be having in mind to borrow $5,000 or $15,000 and you want to make sure that the lender offers the loan amount. The lender will send a reply on whether he approves of loaning the amount you have requested for. The approval of the loan amount depends on your ability to make the repayment promptly. If you get approved, you should expect to receive the funds in your account as fast as one day to two weeks.

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  1. Interest Rate

You want to compare the interest rate when looking for a loan. If you have a good credit score, you will be able to qualify for a loan with a low-interest rate. However, there is no need to be too enthusiastic in looking for low-interest loans. As long as you can afford it, you should apply for it. You want to make sure that you have an adequate credit score when applying for the loan. This will ensure that you don’t get charged with an exorbitant interest rate.


  1. Loan Fees

Besides, you need to check the fees that come with the personal loan. Most personal loans offer a discount when you choose autopay. There will be fees like origination fees which is deducted from the loan amount. The late fee is charged when you make the repayment past the due date. An unsuccessful payment fee is charged if the payment did not go through successfully. A discharge fee is charged when you pay back your loan in full early.


  1. Loan Term

The loan term is an important factor to consider when you are applying for a loan. Many personal loans offer a fixed term from 15 – 30 years. Some lenders allow you to make modifications to the loan term according to your convenience. You can ask the lender if they allow making repayment earlier or later than the loan term as well as how it can affect your interest rate.


  1. Processing Timeframe

You may also want to consider the timeframe of the processing and releasing of the funds. If you are in urgent need of funds, you should find one that can release the funds in 1 day. If it is not urgent, you can look for a p2p lender as they usually release the funds in 2 weeks. You can visit other websites to read reviews from other customers. Customers will often leave reviews about how smooth the loan process goes and how fast they receive the fund.

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  1. Suitable Repayment Schedule

You should choose a lender that offers a suitable repayment schedule. Some lenders will give you the option to postpone payment when you are jobless if you have a record of making payment on time for a certain period. Some lenders offer you the ability to make changes to the payment date when necessary.