Need to Borrow Funds: Know Which Loans Best Suits Your Needs

Need to Borrow Funds: Know Which Loans Best Suits Your Needs

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If everyone had all the necessary funds to cover any expense they ever incurred, there’d simply be no need for the loan industry. As such, you can rest assured that everyone has needed a little financial assistance at some point in their life to get ahead. Whether it’s an emergency car repair, a need to consolidate debt, or assistance with purchasing a car or home, there are lending options available for those in need. 

However, before obtaining a loan from any service provider, it is important to know which type of loan is best and how to borrow responsibly to avoid further debt or negative consequences.

Before Securing a Loan

There are a few steps you want to take before you secure a loan through any service provider. This is to ensure that you’re selecting the best loan type and making the most effective decision as it pertains to your finances. Here are some things you might consider before securing a loan.

  • Know your financial circumstances – part of being a responsible borrower means only opting to take a loan out for what you can comfortably afford to repay. Taking out a large loan with high repayment amounts can cause you to fall into debt and become delinquent on your account. Sit down and assess your financial circumstances. Look at what your income is verses your current expenses and if you have the money to put towards loan payments. If you do, how much is it?
  • Know your credit history – While there are some loan types that do not require a credit check, knowing where you stand is still a good idea. Your credit score and history ultimately affect how much you’re able to borrow and what the interest rates will be on the loan. Again it is imperative to know what you can afford so if you have a bad credit score, you’ll need to consider the fact that the interest rate is going to be much higher than someone with a better score.

Know what type of loan you want

If you were to simply Google the term “loan” you would probably come up with thousands of search results. Why? Well aside from the fact that there are several loan providers to choose from, there are also several types of loans to choose from. Some that you might consider when it comes to personal finances might include:

  • Car loan – as the name implies this form of loan is for those looking to secure funds to purchase a new or used vehicle.
  • Home loan – again, pretty self explanatory, a home loan is necessary when looking to secure funds for a home.
  • Short term loan (often referred to as a payday or installment loan)- short term loans are loans that provide individuals with the opportunity to secure a small amounts of money fast. As the LinkedIn page for Bluetrustloans.com points out, qualified applicants can obtain as much as $1250 in one business day.
  • Personal loan – personal loans can be used for any purpose from going on a shopping spree to planning a vacation.
  • Student loan – student loans obviously are for those that are in need of additional funding to attend a college.
  • Debt consolidation loan – when your debt is through the roof and other means of reconciling your debt are not working to your advantage, some might consider obtaining a debt consolidation loan. This is essentially a loan type that would allow you to pay off all your outstanding debts and repay a balance to one company.

During the Loan Application Process

After completing all of the above steps and determining which type of loan you’re most interested in you can then begin applying for a loan with a qualified service provider. Here are a few recommendations to follow:

  • Know how it works – you might think the loan process is a simple one, but it is always a good idea to learn firsthand how obtaining a loan through a certain service provider will work. For instance, if you were interested in a short term loan from Blue Trust Loans, you would simply check out their How It Works section to read more about the application process.
  • Answer Factually – It is important that you provide the loan provider with accurate information. Falsifying information to get approved easier or to receive more funds will only hurt you in the long run.
  • Wait for a response – if you’re really in a jam, sometimes you want to complete more than one loan application to see who will approve you first and for the most amount of funds, however, this is not smart. Too many inquiries on your credit report can ultimately bring your score down causing a decrease in your chances of being approved. Simply wait for a response from one loan provider before moving on to the next.

Once You Receive an Approval

After completing the application process and receiving an approval, simply follow whatever instructions the lending company requires. Before signing on the dotted line be sure to review the terms of your contract so that you can uphold your end of the deal. Once you receive your funds be sure that you keep up with your payments until the loan has been paid in full.

Everyone needs some help sometimes, but in your effort to get financial assistance such as a loan it is imperative that you know as much as possible. Knowing what to do before you apply, during the application process, and once you’ve received your funds will ensure that you borrow responsibly and remain in good standing with the lending company you’ve chosen.

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Categories: Consumer Financing

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