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How to Take a Loan – 15 Tips before Taking a Loan

tips for getting a loan

Ideally, we would all want to have enough money to cater for our needs. However, realistically you often have to borrow money to meet life’s goals.

Most lenders promise low rates. Others offer quick approval and application process. Technology has also modernized the lending industry. You can find the cheapest loans and be approved within minutes.

Amidst all these glamorous possibilities, there are risks involved. How can you avoid getting raw deals? Financer.com has prepared this checklist of tips for getting a loan.

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15 Important Tips for Getting a Loan

  1. Don’t borrow more than you can repay; smart borrowing is avoiding living beyond your means. Take a loan you can afford to repay. Your personal loan should not account for more than the monthly income.
  2. Shop around; loan rates should be an important factor to consider. Shop around and compare various rates. Financer.com lets you compare 15 lenders across the US. The rate will determine the true cost of a loan. See all loan options here.
  3. Check the small print; ensure you agree with conditions of the agreement. Genuine lenders will gladly explain how to take out a loan with the best rates.
  4. Think about early repayment charges; there is a possibility you might pay off your debt early. Most of the lenders will charge you for early repayment. It’s good to know how much this will cost you.
  5. Check out peer to peer lending; the advantage of borrowing money is the availability of lending options. Peer to peer lending sites links you to different lenders. You will need an impressive credit score to qualify.
  6. Borrow larger loan amounts; some providers offer lower interest rates for larger loans. So you can save by borrowing slightly more.
  7. Avoid multiple loans; having lots of loan applications affects how lenders view you. Your record makes you appear to be in a serious financial trouble. Your chances of getting a loan are minimized when a lender views you as a ‘high risk’.
  8. Understand the risk of secured loans; secured loans may be cheaper but you can lose your property if you fail to repay. Ensure you can keep up the monthly payments. This is a clever tip for getting a loan.
  9. Take a personal loan that offers the best deal; there are various purposes for a loan.it could be to consolidate a debt or for home improvement. You may also invest in a business or take a vacation. Check for types of loans that directly meets your specific needs.
  10. Choose the right lender; your options for loans include banks, credit unions, and online lenders. Their terms and interest rates vary. Choose a lender who offers the best deals.
  11. Be careful with credit card consolidation; if you have consolidated debt, don’t rack up a fresh credit card. You would soon get back on the debt cycle.
  12. Make sure your credit score is accurate; an error in the credit score could make a significant difference in the interest rate. Another tip for getting a loan is to ensure you have a good credit.
  13. Be careful with automatic withdrawals; if you authorize direct payments from your account, you can find yourself out of money.
  14. Know in advance the consequence of late payments; emergencies do occur. You might find yourself defaulting payments. Ask your lender if you can modify the loan terms in such cases. Know if there is room for negotiation.
  15. Fixed rate or variable? A variable rate loan usually has a lower rate. A fixed rate will ensure your payments remain the same. The latter is advisable if you have a long-term loan.

Be a Smart Borrower

Concise planning is required before taking a loan. Ensure you have all the details regarding a loan at your fingertips. Don’t rush to sign agreements without fully understanding and agreeing to the terms.

You can also consult financial experts. You can get advice on how to take out a loan.

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