Whether one is seeking a study loan, a car loan, business improvement loan, a mortgage or a home improvement loan, there are pertinent considerations that when well addressed provide an important gateway to accessing the best bargain at the best balance of terms and conditions. This article highlights the points of concern that have to be adequately addressed before settling on the loan facility.
1. Effective interest rates
As a matter of policy, different loan facility providers will price their product based on the lending rates set by the regulating authority.
When you know the base lending rate, it becomes quite easy to determine the margin with which the effective interest rate, as quoted on the letters of offer, have been adjusted. This in turn determines the expected interest expense to which the borrower will be exposed.
2. Negotiation fees
Information on how much fees will be levied on the negotiation and processing of the facility comes in handy. These fees could either be deducted upfront from the amount disbursed or loaded onto the amount applied for and repaid as part of the total loan exposure.
Understanding the available options from the available lenders helps one to make an informed choice and make arrangements to cater for the fees.
3. Other silent/Hidden Costs
There are instances in which a lender may be silent on other pertinent costs which the borrower, if not keen enough to make an inquiry at the time of facility application, will end up receiving a lesser amount than anticipated. A clear and elaborate analysis of such costs serves to eliminate any possible future conflicts.
4. Need for collateral
It is very important to go in depth and establish whether there is any need for additional security for the loan facility. This could take the form of the documents of title to a property, a vehicle log book or even physical items as required by the lender.
Having this crucial information well in advance helps those searching for a facility to weigh the options and obtain the required security in good time.
5. Estimated Processing time
Since it takes some time for the application to go through the various stages up to loan draw-down, it is important that the applicant has a clear idea of the expected processing time. This helps to get rid of unachievable expectation and any possible customer dissatisfaction.
With this information, one is able to evaluate the efficiency of the processing systems of various lenders and thereby make informed decisions on whom to place the application with.
Before making the final decision on which loan facility provider offers the best proposition in the most efficient manner, there are key issues that a potential borrower needs to carefully consider. Among these issues is the time it takes for the facility to process, the interest rate, the negotiation fees as well as the need for collateral.
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