Mistakes To Avoid While Applying For Loan

By Author: Professionstar
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Check your credit rating
All banks verify the FICO Score of the loan applicants. A bad FICO Score could lead to rejection or higher cost of the loan while a good score helps you secure a loan easily, and could even result in the lower interest rate. So before applying for a loan, check your FICO Score and take steps to keep it healthy. If your credit score is 750 or above then your chances of fetching a good loan deal, bargaining for a lower rate of interest are high. On the off chance that your score is lower than 750, you are helpless before loan lenders on interest rates.
Compare Various Loans
Devoting a little time to compare loans can help you save a lot of money in the long run. Visit various banks to know about the offerings. Discuss with your friends and colleagues to get an idea of various options and facilities they are availing for their loan. Do an online comparison of various products to fetch the best loan deal according to your needs. Compare all your alternatives to make an informed decision.
Borrowing Beyond Your Capacity
You should always consider your income levels while taking ...
... a loan and borrow the amount which you can easily repay. Before granting the loan, banks determine the amount eligible to you by looking at your income and existing liabilities. They, however, do not take into account your existing expenses. You are the best judge of your existing expenses and so do not take a loan which results in higher EMI and put you in financial distress. If it is higher or too close to your monthly income, then consider a cheaper option for the thing you want to buy.
Negotiate for the best rate
Banks are always competing among themselves for lending to credit-worthy borrowers. So negotiate hard to get a better interest rate on your loan. Even a fraction of a percentage of APR could mean a substantial reduction of repayment burden.

Compare interest payable, charges when installments fall due and all other charges. Your bank may state it offers particular rates to its current account clients yet you may at still find less expensive loans available somewhere else.
Within their loan offerings, banks have products that could work out cheaper for you. These could be loans against assets such as gold, shares or even deposits. Since these are asset-backed and secured the interest rates could be much lower than personal loans.
Know the risks of secured loans
Secured loans are less expensive than unsecured loans however you risk losing your home in the event that you don’t keep up reimbursements. Secured loans are just offered to mortgage holders with value in their property and mean the moneylender takes a charge on your property if you fail to pay. So don’t sign-up unless you’re sure that you will be able to meet your repayments. This sort of credit is fundamentally less risky for loan companies but risky for borrowers.