In the past applying for a loan meant physically going into a bank and pitching your case to a bank clerk. These days getting a loan is much simpler and a whole lot less painful. Previously applying for a loan meant waiting for days to receive approval. Whereas today, the whole process can take a matter of hours.
All you really need is a good internet connection and a device to access the internet from! Because applying for a loan these days is virtually done completely online. Nevertheless, as simple as applying for a loan can be, there are still some questions you might want to be answered when it comes to getting one. Here you should find all your questions answered for when it comes to applying for a loan.
How to apply for a loan: What do I need to know before applying?
Before making a loan application there are a few things you need to know. Here is a list of the 10 questions you should ask yourself before applying for a loan.
Why do I need a loan
this is the first question to ask yourself when you want to know how to apply for a loan. Borrowing can be expensive and it’s important to ensure you’ve considered all the options first before you take the plunge.
Can I repay the loan
working out whether you can afford to repay the loan is an important question to ask when deciding whether to borrow a loan or not. The best way to work this out is to determine what your budget is. Use this useful budget calculator to help you work out what your household budget is.
Have I checked the terms and conditions of the loan contract?
As part of knowing how to apply for a loan it’s always a good rule of thumb to ensure you know what you are signing up for. That means reading through the terms and conditions of the loan and knowing what your obligations are. This means understanding all the fees and charges involved with borrowing the loan.
Have I checked that the lender is legitimate?
most of the time it’s easy to pick out when a lender seems like they are fake. Though other times it’s not as obvious and its worth doing a quick background check just for your own peace of mind. To check whether a potential lender is legitimate or not, the best source you should go to is here.
What information will I need to provide as a part of my loan application?
One key part of how to apply for a loan there is providing some information as a part of your application.
this will include details about your age, your residency, your mobile phone number and email address.
you will be required to enter your internet banking details. This is so the lender can do a quick check of your recent financial history.
What can my personal loan be used for?
The great thing about personal loans is that they do not need to be used for anything in particular. They can be used for anything that is specific to the individual. This can range from a wide variety of purposes. Here is a list to give you an idea of where personal loans can be useful:
if you need a bit of extra help to pay for your special day, a personal loan can be the perfect solution.
An unexpected car repair
if out of the blue something in your car starts to malfunction and you need to get it repaired, a personal loan will help you to do that if you don’t have the funds readily available to you.
if you’ve come back from a holiday and exhausted all of your financial resources, a travel loan might be just what you need to get you by until your next pay check.
A necessary household item
if an important household device breaks down, you may need to get it back up and running ASAP. But if it’s something like a fridge or a washing machine, these can be expensive. You may not have this money lying around.
Business start-up costs
a personal loan can also be the perfect solution to help to turn your small business idea into a reality. It can be difficult to get a business loan through a bank, so personal loans can be the best way to allow you to pay for any training costs, materials or equipment necessary to start out.
Will my loan application be approved?
There are several factors that will contribute to whether your loan is approved or not. For instance, you must meet the basic requirements as mentioned above. Your credit rating will also be looked at, and finally, your financial history will be considered.
What it means by financial history is that loan providers will use financial checking software that looks at your most recent bank transaction in the last 90 days. This should give the lender a good idea about the regularity of your income. It will also help lenders to see whether your financial situation will allow you to afford to repay the loan.
Which loan provider should I choose?
Before you decide to borrow from a lender it’s always a good idea to do a bit of research on the different lenders out there. Here is a list of some of the things you should look out for when deciding who to borrow from.
Identify your why
having a clear idea of what exactly you need the loan for will help you to decide which lender will be best to go with. Loan providers tend to specialise in different types of services, so knowing exactly what you need a loan for in the first place will help you to narrow your focus.
Some reasons for borrowing money from a lender could be if you wanted to buy a house – you will clearly go to a mortgage lender. On the other hand, you may want to buy a car. Alternatively, you may just need to pay for a car repair or car registration. Since each reason is quite different it means that the lender you choose might be different.
Decide the type of loan you want
Once you have worked out why you need to borrow credit you should decide upon what type of loan you want to get. For instance, it could either be a mortgage loan, a car loan or a personal loan. Though, personal loans can vary quite a lot amoungst themselves. For instance, you can get short-term loans which are usually amounts of up to $2,000, or you can get medium-term which are usually no more than $5,000. However, there are also longer-term personal loans that can be up to $10,000 or more.
Deciding how you want to pay for your expense will mean looking for certain lenders. For instance, there are different types of financing options available to purchase a car. You could either get financing through a dealer or you could decide to pay for your car by taking out a personal loan. Perhaps you need to pay for some business-related expenses or business start-up costs. You could either get a business loan from a bank or you could take out a personal loan. So, once you determine how you want to finance your purchase, you will be able to narrow your lender focus.
Work out how much you need
having a clear idea about how much you need to borrow is an important deciding factor in choosing which lender to go with. Some lenders will offer small short-term loans. Others will offer larger, medium-term loans and some will offer larger long-term loans. This is important as determining how much you need to pay for an expense will also determine what type of loan you get.
This is also a key factor when it comes to your credit history. If you have a poor credit history, then you may only be able to borrow a smaller amount. What is also very important is working out what repayments you can afford to repay. If you want to borrow a personal loan, it’s a good idea to work out how much you can afford by working out what your budget is. It’s important to make sure that you will have enough to cover your living expenses.
Look at the loan term
another important factor when choosing a lender is looking at what the loan term is. This is the period over which you will have to repay the loan. The loan term plays a big role in determining what repayments you will have to make. Therefore, it’s important to look at the loan terms that the lenders offer when applying for a loan. It’s important to choose a lender that offers the right loan term for you.
Having a longer loan term means that you will have to pay more interest in the long run, but your monthly repayments will be less.
Compare the fees and charges
comparing the rates that different that lenders are offering is an important step in choosing which loan provider to go with. This is because depending what their rates are, you could end up paying much more to borrow money than with other lenders. One way to do this is to look at the comparison rate. It is a figure that includes the interest rate plus any other fees and charges associated with the loan. It is the easiest way to compare the different costs of loans offered by various lenders.
Nevertheless, this is not the only important factor to consider when choosing a loan. Some lenders may offer features that are better for you than others. For instance, you may want to choose a loan that gives you the option to make extra repayments.
Do a bit of research
the last step is to do some research. Find out what others have to say about different lenders. Reading some reviews can give you an idea of whether the lender has had a good track record with previous customers. You may come across a lender that has excellent reviews that you hadn’t heard about. It is a good way of making sure you make a fully informed decision.
If you are thinking of borrowing from a lender you have heard of it is also important to check that they are accredited. There are some loan scams out there, so if you want to ensure you are dealing with a legitimate company it’s worth checking whether they are registered with the Australian Securities and Investments Commission (ASIC) in their professional registrar.
At the end of the day, applying for a loan online can be quite simple. Though, it’s important to make sure you have all the information together before you apply. In addition, it’s always a good idea to do a bit of research on the lenders that are out there. This is so that you make the best decision for you, that suits your needs.