Loan Tips.
Apply for a loan
HERE
| Contact T. O' Donnell
1. You should consider borrowing
costs.
Examples of these are insurance schemes
and prepayment penalties. Make sure you understand and are willing
to pay them all. Understand your agreement before you sign, including
terms and conditions. A loan may become too expensive, with variable
interest rates and fees.
1a. The total cost of your loan
will depend on the annualised percentage rate (APR).
The annualised percentage rate takes
into account the interest amount, and all other charges.
2. Try fully mutual building societies
and credit unions, then find companies that are dedicated to loans.
The first were set up to help members,
and the latter's earnings come exclusively from lending money. They
can offer better deals.
3. Make sure you get the full
name of the person with whom you speak, if you call your loan company.
Big offices are impersonal; your
loan officer could leave at any time.
4. Don't take on a loan thinking
"Well, I can always go bankrupt".
You would find it very hard to get
credit of any kind in the future, except at loanshark rates.
5. Type the name of the lender
into a search engine.
See if there are any negative postings
about them.
6. Think about your budget.
Then leave a portion of your monthly
income aside as coverage for emergencies and unexpected bills.
7. No matter how cheap a loan
may be, pay it off as quickly as you can to avoid interest accumulating.
Try to get a loan that allows early
payments; the quicker you pay back, the less interest you pay. If
you extend the duration of the loan, you will have to pay much more
in interest.
8. Any more than four credit checks
in one month looks suspect, and may affect your credit rating.
When shopping for a quote, ask them
if they're going to check your credit-rating, to be on the safe
side. They don't need to, to give you a rough estimate.
9. Depending on how bad your credit
history is, it may be difficult to find an unsecured loan.
Lenders may impose very high rates,
and others will simply reject your application.
10. To ensure you get the
best terms, keep your credit-line as small as possible.
Loan officers tend to count the total
line of credit available as a liability.
11. Pay off small debts before they're due. Cancel credit cards
you are not using.
IMPORTANT:
Keep your oldest card, for the credit history attached to it.
Otherwise, consider their interest rates and fees, when deciding
which ones to hold on to.
12. If your spending is out of
control, don't put your home at risk by getting a secured loan to
pay off your debts.
13. Shop for interest rates when
the financial markets are calm.
Rates change daily, so compare lenders.
The quotes you get should be from the same time period.
14. Submit a neat application
form.
It will be read by a human being;
appearances count.
15. Don't pay up-front fees to
anyone.
If your credit is bad, these are
a waste of money anyway. You'll still be declined, or offered bad
terms to fob you off.
17. If you have a good credit
rating then you should get a good rate, but ...
This is not necessarily always the
case, however. You see, a loan is like any other good you buy in
a shop; the vendor may try to get you to buy a pricier one.
18. Don't sign papers without
reading them.
19. Keep a copy of every cheque
you write for your loan.
20. In the UK, if your credit
is bad, or you get into trouble with your loans, get in touch with
the CCCS: the Consumer Credit Counselling Service http://www.cccs.co.uk.
They're the real McCoy, unlike many
others.
21. If you have problems with
repayment, write to your lender as soon as possible.
The earlier you tell them, the more
sympathetic they'll be. You can then make arrangements for under-repayments
until you get back on your feet.
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Do you really need this loan?
Go for a walk. Have a long bath. Have a chat with yourself. Buying a loan
is like buying a second-hand car; it's just another consumer item. A bargain
may be had by exploring ways of cutting your outgoings; spending less,
trying different vendors, or deciding you don't need one at all.
You can easily spend as much again in interest as
the initial capital. You could be putting a monkey on your back. Are you
getting the loan to satisfy a transient desire, like a smart car, or for
something serious, like setting up a business?
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Start Saving. Every pound saved
is a pound off your loan amount. A pound not borrowed is a pound you're
not paying interest on. If you're not in a hurry to get a loan, trying
saving up, and maybe selling off something you don't need. You'll
reduce the size of your repayments, and breathe a little easier.
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Avoid Insurance. You don't need
this if you're reasonably sure you can pay back the loan without too much
trouble. The insurance is for the benefit of the lender, not you. Adding
insurance adds a fat wad to the cost of your loan. If you
have a good credit rating, you can refuse to take it on. It's a massive
extra expense.
It's a bit like when you buy a DVD player in Dixons;
the salesboy asks you if you want insurance with that, when he knows a)
you're already covered by a warranty, and b) The item is unlikely to break
down. It's just a way of scr*wing more money out of you.
People with bad credit may have no option but to
take it on, but you can always refuse it initially, and see what happens.
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Shop around. Get quotes from 4
lenders. You may be able to save yourself thousands of pounds by avoiding
loans with high rates and/or high fees. A 0.5% lower rate on a £100,000
loan for 5 years will save you over £1,300 in payments. Try
your local bank or credit union, mortgage brokers and internet resources.
Don't choose lenders just because
they have the lowest rate. Consider the overall cost of your loan.
A mortgage or loan varies
according to:
The amount borrowed;
The interest rate;
The type of rate (fixed or variable);
The term (length
in years) of the loan;
Discount rate for X number of years;
Deposit (downpayment);
Associated fees (broker, origination, prepayment etc.);
Local or national taxes;
Insurance required by the lender.
Online loan calculator
HERE
Improve your credit-rating.
Find out what it is at Equifax,
Experian, CallCredit
and Trans Union. The last
two are UK and US only, respectively. Lenders may access them all. Then
do the following:
Make sure you are on the electoral
register.
Satisfy liens and
public judgements, such as in the County Court (CCJs).
Correct errors,
including erasing judgements older than seven years. Paid-off debts can
be legitimately recorded up to seven years after settlement.
Add information showing
stability:
- Current employment, employer's name and address and your job title.
- Previous employment, if you've had your current job less than two years.
- Current residence, and if you own it.
- Previous residence if you've been at your current place under two years.
- Date of birth.
Avoid unnecesssary enquiries
or shopping around for credit or loans. Multiple accesses by lenders
of your credit report can indicate that you need many lines of credit.
This looks like you are desperate for money, or trying to commit fraud.
Close unneeded accounts.
Close them off slowly, not all at once. Keep only two credit cards, one
of which should be your oldest; it will have the longest credit
history attached to it.
Pay off credit cards. Keep balances
low, and paid off on time.
Keep your debt low; below 75%
of available credit.
Build a good payment history.
Pay your bills on time!
Open a savings account
at your bank.
Avoid debt-restructing
or loan-consolidation companies. These can get you into more trouble.
Negotiate yourself with your creditors, and get any agreements in writing!
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Watch out for the 'Deal
Of A Lifetime'. When shopping for your
loan, watch out for the deal that seems too good to be true. If you see
that a few companies are quoting much lower than average, ask: Why so?
If you you can never speak to an individual, or you have to wait 'on hold'
for a long time, this speaks badly for the level of service you are likely
to get.
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Keep
a copy of every cheque you write for your loan.
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If you call your lender about your loan,
make sure you get the full name of the person with whom you speak.
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Submit a neat application form;
it shows you're business-like and efficient.
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Submit your applications to only one
or two lenders at once. When lenders see too many recent enquiries
at your credit bureau, negative thoughts come to mind: Are you in financial
difficulty and trying to "borrow all over town"? If other banks
are rejecting you, why should we approve the loan? Are you getting 'greedy'
- borrowing from many sources, for the same need?
Apply for a loan
HERE
| Contact T. O' Donnell
Only pay up-front fees to well-known
or highly recommended institutions. While most institutions are reputable,
it is always best to be cautious.
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Don't sign documents without reading
them. As soon as possible, before you close the deal, review the documents
you'll be signing, and make sure you understand them, so you won't have
to sign them in a hurry.
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Keep your credit line as small as
possible. You could be turned down for other loans, even when your
credit line has a zero balance, since a large credit-line indicates a
large potential payment.
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Understand the difference between
an equity loan and a credit line.
Equity loans are closed:
You get all the money up front, then make payments on that fixed loan
amount until the loan is paid off.
Equity credit lines are open:
You can get an initial advance against the line, then reuse the line as
often as you want, during the period the line is open.
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Check the lifecap on your equity line.
Many credit lines have lifecaps of 18%. Be prepared to make high interest
payments if rates move upwards.
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A home equity line of credit may not
always be cheaper than a car loan, or a credit card. Compare the effective
rate of your credit line (i.e., after the tax deduction) with the rate
on a credit card or car loan.
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If
your spending is out of control, don't
get a home equity credit line to pay off your credit cards.
Don't put your home at risk by spending large amounts on your credit
cards, after paying them off with your credit line.
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Pay off small
debts before the due date. Cancel
credit-cards you are not using. Loan officers tend to count the total
line of credit - even if you owe nothing - as a liability.
They will only cloud the picture. Close credit lines that you have
no intention of using in the near future. Also look closely at the interest
rates and fees, when deciding which cards to keep.
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Shop for rates when the market is calm.
Rates change from day to day, so compare lenders. The quotes you get should
all be from the same time period.
If you find yourself in a dispute
with a lender about a payment or another issue, don't send correspondence
to the same address you send your payment.
Apply for a loan
HERE
| Contact T. O' Donnell
|
