Always know that the interest rate is individually based on your financial situation. Even if the lenders or loan intermediaries show an excellent “off-interest rate,” you rarely manage to get that interest rate.
Do Not Apply For Too Much
Of course, it is tempting to borrow as much money as possible. Unfortunately, lenders’ evaluation systems do not work that way. The usual principle is that the more significant the loan amount, the changes in the interest rate. There may be nothing new or revolutionary for you. But it is easy to forget it once you are sitting there with your loan application.
Once and for all. You must seek the minimum amount you need.
Typically, lenders are more generous with loan amounts and interest once you have had a loan with them for a period. Provided you handle the payments that are.
Therefore, they are better if you extend your loan after a couple of months. Or even better after a year.
Use the “Right” Salary in the Application
Do you know the most critical parameter when applying for a personal loan?
You have an income of more than $70,000 per year, or if you have no income, you will not get a loan. There is no way past it. But I guess you have a salary of over $4,500 / month. Then, you will have no problem getting a loan. However, you must enter the correct salary.
I mean the highest salary you get from your employer by the proper compensation. So, you must track whether you will receive a salary increase or it may be time for a salary interview.
Remember that the lender always takes out a credit report showing the previous year’s taxed income. It means that it will not correspond to your specified salary if you have received or will receive a salary increase. But do not worry. You must submit your latest salary specifications verifying your new income.
Choose a Realistic Repayment Period on Your Loan
Instead, I would choose a repayment period of 3-7 years, which gives lower interest rates. In this way, you improve your risk profile for the lender.
And it would help if you never forgot that you can always make extra repayments whenever you want.
As I mentioned in tip # 1, it is easier to change your terms as you and the lender build relationships.
The lender can extend the loan period while maintaining the interest rate after a couple of months.
Find a Co-Borrower
The only problem is finding a person who trusts you fully. Then, that person, as I said, will be forced to repay the loan if you cannot afford it.
So, most likely, it’s a family member or maybe a close friend. Ensure you are clear about what you will use the money for and that you have made a budget. A budget that shows that you can repay the loan. In order not to disappoint the co-applicant.
Improve Your Credit Rating
The most crucial basis that the lender has for evaluating your loan application is credit information. The credit information usually obtained shows:
- Your taxed income
- Place of residence
- Surplus capital
- Existing debt
- Payment remarks
- Most recently requested credit reports
Do Not Apply to Several Different Lenders
It may sound strange; should you not expose several different lenders to compete against each other?
Both yes and no.
Once you fill out a loan request, a credit report is retrieved. Your credit report lists all the credit information collected in the last 12 months.
Compare Different Lenders
Of course, I take the most straightforward and crucial tip last. To get the lowest interest rate, you must compare different lenders against each other. But wait, you said it was negative, right? Yes, if you apply for a loan from several different lenders.
Instead, use a loan broker. A loan intermediary acts as an intermediary between you and various lenders. They collect ONE credit information from you, which they can share with several lenders.
If you are lucky, a lender wants to lend more money and offers good terms on their loans. Most lenders work with 20-40 different lenders. So, with a credit report, you can get offers from up to 44 other lenders.
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