Applying for a loan is not a decision to be taken lightly. So before doing so, it is worth considering a number of issues. Failure to do so may become a detriment to the applicant, rather than a benefit. We tell you what are the factors to assess before applying for a loan.
Linked to the classic questions, how much can I borrow?, How long can I repay it? etc., there is insecurity and at the same time the need. That is why applying for a loan is not something that should be done without first looking at all the options, alternatives, and understanding all the conditions and links derived from the said operation.
In this article you will find the main aspects of value and that should be fully understood to know what we are requesting and what we are committing ourselves to. Not stay with the doubts!
What should be considered before applying for a loan?
Like many of the decisions we make in life, first of all it is interesting to analyze the situation, the conditions, the possibilities… When applying for a loan, we suggest you take into account these 7 aspects:
Compare the different offers
First, and as with the most common type of loan, mortgages, you have to compare. The offer is varied, there are many options, but not all have to interest you. So you should inform yourself and see which bank offers you the best conditions.
These days, there are many online websites that help in this process. Kredity is among them, they compare different loans, offers, etc., so users can easily get one that suits them best.
Look at the interest rate
The interest rate is one of the most important things to know before applying for a loan.
The interest rate is the price of money, that is, the price to pay for using an amount of money for a certain time. Its value indicates the percentage of interest that must be paid as consideration for using a certain amount of money in a financial operation.
In addition, it is necessary to know the difference between a fixed interest rate or a variable interest rate, that is, always pay the same amount until the debt is settled or do so depending on the indicator.
Don’t overlook the APR, either, as there are other conditions that can make your loan more expensive. The Annual Equivalent Rate includes the total cost of the loan, including commissions, interest, expenses, and commissions.
The fee
You shouldn’t confuse a low fee with a cheap fee. Based on your financial situation, you should decide to pay a higher fee in less time or a lower fee in more time. Keep in mind that with a low amount you can get to pay more interest, which in the long run will be more expensive.
The term
Make sure that the deadline also suits you. It is best to tend to short terms, but we are not always able to meet the loan in a short time. This is what happens with mortgages, whose term is usually 30 years. While in the case of personal loans it is usually 5 years.
It, therefore, depends, in most cases, on the amount loaned. Whatever you decide, do not fall behind on the payments and settle it as soon as possible, since you will pay off the loan sooner and it will be cheaper.
The types of loan
We must also choose the loan based on the utility that we are going to give to the money; A car loan is not the same as buying an electronic device, for example.
Discover all types of loans and decide which one best suits your needs. Here are some of the most common ones that can help you:
- Interest-free financing
- Car loan
- Online loan
- Instant loan
- Financing of studies
- Financing for purchases in shops
- Loan of money between individuals
The small print
The commissions, the links, the clauses… It is important to read all the fine print and be clear about all the concepts and implications of the loan so that later there are no surprises.
Be clear if you are going to be able to meet the loan
Lastly, before applying for a loan, you should ask yourself if you are going to be able to cope with it, and if you really need it. Without forgetting that it is never convenient to ask for more money than is needed.
