Things to Consider Before Taking Out a Loan

If you’re thinking about taking out a loan, there are a few things you should consider to make sure you get the right type of loan for you and to make sure you can afford the repayments. Taking out a loan requires grave consideration before you commit.

What Type of Loan?

It is important that before you proceed to find the right loan for you, you understand the differences between the diverse loans available, such as secured and unsecured. A secured loan lender will require a form of security before your application is accepted, typically this is your home. If you can’t make repayments, the secured loan lender will use your home to re-claim what you borrowed. An unsecured loan, on the other hand, isn’t secured against any assets, but they are usually for less money and a shorter repayment term.

It is therefore important to know how much money you need to borrow and how long you intend to be paying back your loan.

Credit score

Your credit score will affect whether you are approved for a loan. Different companies have different criteria for approving loans, so just because you’ve been rejected by one does not mean you will be rejected by all.

Use sites like Experian, Equifax and Callcredit to check your credit files, and make sure there are no mistakes. Errors can happen, and they can damage your applications. If you can, check all three as different lenders will run different credit checks.

When you apply for credit, in any form, it is added to your credit file so think carefully before applying. If you apply for too many in a short period of time, you will appear as desperate for credit, and other lenders may be more likely to reject you based on this. Make sure you space out your applications.

Budget

Before you get a loan, you need to know that you can repay it. Use a loan calculator like this one from Nemo Loans to figure out whether the monthly repayments are feasible for you. This is really important, because you need to make sure you can afford your loan after you’ve got it.  If you proceed with Nemo Loans, remember that a Nemo Loan is secured on your home so always make sure you can afford the repayments

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