Things you Should Know Before you Apply for a Personal Loan

Posted on January 12, 2018 | By Manager personal loan

Dealing with lenders is not easy. Especially if you are applying for a loan, there are MANY things you have to know beforehand.

If this is the first time you are going to apply for a personal loan, there are a few things you should keep in mind. The first and most important thing you should do is consider your credit score.

Your credit score is the value generated by credit reporting agencies based on your credit report. Factors such as your payment history, number and type of current loans (whether they are revolving or non-revolving), debt to credit available ratio affect your credit score the most.

Before you start the process to even talk about a loan with a lender, make sure you can trust the institution.

There are many fraud lenders these days who might use your information to commit identity theft. Especially if you are thinking to apply for a personal loan online, you HAVE to make sure the website is legitimate.

Otherwise, you might basically hand over your information to someone who would be more than happy to flush your credit score down the drain! So, if you want to get a guideline about what you should do, read on.

· Check your credit report

Before a lender approves your loan, your credit report will be the first thing they check- which is why you should review it first!

Your credit decides whether or not you can be trusted with a loan, or how risky you are as a customer. It also dictates how much interest you will have to pay as people with a bad credit report will have to pay higher interest (since they already have a bad record and are deemed risky).

Start by reviewing your credit score. If your score looks weird to you, make sure you check your reports carefully. If you find errors, get them corrected as soon as possible.

· Look for local options or apply online

The first places you should look for a loan is a local lender that is nearby you.

Taking a loan involves multiple trips to the lender; hence choosing one that is far away from you will be pretty inconvenient. Start by collecting details about the banks available and what their requirements are for a personal loan.

Most of the information you need will be available on their websites or brochures. If you have more questions to ask, you should talk to their loan officer over the phone or even in person. Don’t keep questions unanswered.

If you want things to be even more convenient, you could apply for a personal loan online.

· Research and compare

If you think looking at one lender is enough for you to decide whether or not you should take a loan, you are going to make a huge mistake.

Be sure to look into multiple lenders and compare their rates. Also find out all the terms and conditions of the loans they offer, whether they have some hidden charges or not.

Moreover, make sure you know the consequences of failing payments or becoming default. Even though you will obviously be trying to make your payments on time, some lenders have major repercussions for delays in payment.

Finally, only apply for the loan(s) that matches your requirements and is ensured to be accepted. Every loan application you make will negatively affect your credit score, so try not to apply for loans that you know you will not receive.

· Collect the paperwork and information that you will have to provide

Whenever you apply for a loan, you have to provide certain information about yourself.

Such information includes your monthly or annual income as they need to know your debt to income ratio. They will also require information about your expenditures, the number of dependents, residential status (whether you live in your own apartment or in a rented flat), name and address of your employer and how long you have worked for them.

Therefore, preparing the paperwork of this information beforehand means you will be able to submit them the moment they are asked for, hence reducing delay.

Even though dealing with lenders might seem like a scary task in the beginning, it will become a piece of cake for you if you follow these guidelines! Applying for a personal loan in Mombo is pretty easy. We have an app for it and the application process is like a walk in the park. Mombo SACCO offers loans of up to 5 times ones savings, loans at 12% per annum, interest on savings at 6% per annum withdrawable twice annually, annual dividends on one’s share capital, all processes are digital no paperwork. Download our app to know more.