Browsing: Credit Management

Getting a Sizable Amount When Applying for Personal Loans

 

Getting the maximum loan amount when BORROWING money can be a little difficult especially if you don’t understand several factors that is involved in applying for one. Generally, the main factor that you need to show is your CREDIT rating score. Preparation is necessary when you are aiming to get the highest possible amount of loan. You need to be able to present your loan case properly and present proof of a more than average credit score and the ability to pay back the loan at the prescribed time agreement. Four factors are usually the basis of lenders when they are deciding to give you the best possible loan deal. These factors are to show the purpose of the loan, proof of your income and expenses and credit score.

 

Purpose of the Loan

 

In order to get the maximum loan amount, you have to convince the lenders that the loan purpose will require the maximum amount limit that they can give. For instance, if the loan is to purchase a piece of property, you can claim that the value of the property is worth the price because of its prime location.  Another way is for you to secure the loan with collateral of the same value or higher as that of the loan. If you can do this, you just might get the amount you need plus a low interest to go with the loan.

 

Proof of Income and Expenses

 

To get a sizable amount of loan, it is necessary to prove to the lender that your regular income is high enough to cover the cost of the loan and enough surpluses to make a consistent monthly payment on the liability. The basic rule here is for you show proof that you have a high degree of income and very low expenditure cost.

 

 

 

Above Average or High Credit Score Rating

 

Everything discussed above will be useless if your credit score is below average. Both traditional and alternative MONEY LENDER will base their approval on how good your credit score is. If your rating is bad, it’s best that you first refrain from applying for a personal loan.

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The Right Time to Use Short Term Loans

A PERSONAL LOAN can also be very helpful for small businessmen especially those who are engaged in single proprietorship retail trade. Short term loan is just right for small businesses that face shortage of operational cash. They provide financially strapped small businessmen enough sum of money to tide them over until a new flow of cash revenue comes in. Also short term loans are easily accessible compared to traditional loans and they can be applied for even from small banks or alternative MONEY LENDER such as the CREDIT union.

 

The Right Reasons for Getting Short Term Loans

 

Short term loans for businesses may only be good for specific financial problems that a small business might face. This type of loan is good to resolve shortage of cash flow. For instance, this can be used to fund or pay supply bills and other expenses. If small expenses are needed to be paid immediately, then short term loan is the answer. This loan is also ideal to solve seasonal trade problems such as the need to suddenly increase your stocks due to a holiday season. Unexpected need to build up the businesses inventory can be a problem and short term loan may be the solution for it. Another good use for short term loan is if the business needs to expand. A sudden burst of sales may require the owner to open up another branch and without the necessary funding, this can be impossible to do. Finally, business emergencies such as breakdown of equipment can cause a business a lot of money. Short term loan can easily remedy business emergencies like the one described.

 

Advantages and Disadvantages of Short term loan

 

Short term loans usually mature within a year so borrowers have ample time to repay back the loan and the loan is also a good way to boost the businesses credit rating. The only drawback for this loan is the high interest it incurs but with a good increase in business sales, the loan will be paying for itself in the long run.

 

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Things to Look Out For When Applying for a Personal Loan

If you suddenly come face to face with a financial dilemma, and your savings is not enough for the expense, apply for a PERSONAL LOAN. This type of loan is one of the easiest to access especially if you have a good credit rating. Personal loan is usually given in lump sum amount and is paid back via installment that usually last from one to five years, depending on the agreement between the MONEY LENDER and borrower. There are several types of personal loans. Examples are installment loans, secured loans and unsecured loans. Study your financial needs first to find out which type of personal loan would suit your need.

 

A Personal Loan May not be Right for you

 

Before applying for a personal loan, it would be prudent to initially check first your current credit rating. If the present credit score is above average or even better you can apply for a more manageable loan from the CREDIT market. For instance, a good credit score qualifies you for credit cards that provide zero or very low interest rate. However, most credit card only offer zero interest rate for a predetermined amount of time which is usually a year but this might be enough time for you to repay back the loan.

 

Remember that Banks are not your only Source

 

For most people who are in a financial dilemma, their immediate “go to” partner is usually the bank. This is perhaps because they are a client or depositor of the bank or feel that they can get a better deal from institutions that know them. However, it is still best to consider shopping around for better deals. The internet today is a good source of information if you want to get a good deal on personal loans. Also do not apply for too many loans because this is a good way to bring down your credit score and always read the fine print in the loan agreement because you may just discover that you will be paying much more than what you have bargained for.

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Various Types of Personal Loans

There are several types of PERSONAL LOAN that an individual can borrow from both traditional and alternative MONEY LENDER. They are small business loan, installment loan, short term personal loan, secured and unsecured loan, home equity loan, and home equity line of CREDIT.

 

Small Business loan; Installment Loan; & Short Term Personal Loan

 

Small business loan is usually for people who would just want to set up a small business to help increase their income. These businesses are usually in the area of retail trade. Loans for small businesses are release only after the borrower has developed and presented a business plan, have acquired licenses for the business, and performed other necessary business task. Installment loans are personal loans whose repayment terms last for several months. The loans repayment is amortized by the borrower and paid usually at the end of each month. Short-term personal loan is somewhat like an installment loan except that repayments terms usually take several years to finish.

 

Secured and Unsecured Loan; Home Equity Personal Loan

 

Secured loans are those where the lenders require the borrower to put up collateral while the unsecured one does not. The main difference between the two is that the loan amount from secured loans has less interest levied in them. Home equity loan is a fixed amount cash to be used for home improvements, to purchase properties, for educational loan assistance or to be used to consolidate other debts of the borrower. The reason for it being referred to as home equity personal loan is because the borrower needs to secure the loan by using his or her property as collateral.

 

 

Home Equity Line of Credit

 

Home equity line of credit also known as HELOC is a type of personal loan that allows the borrower to have a credit line similar to that of the credit card. The loan allows you to get the money from the credit line but only up to the maximum amount granted by the lender. The beneficiary of the loan can simply write a check whenever he or she needs cash. This type of loan is usually used for renovation of home and other properties.

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Financial Problems Solved by Personal Loans

When you are faced with money problems, a PERSONAL LOAN can be good way to solve it. A personal loan can be a good thing and you can do this by properly using it to resolve a financial dilemma. With this extra fund, you can restructure your debt, pay off urgent expenses and more importantly use it as some form of an investment. One thing nice about personal loans is that you specifically know the terms of payments, when you’re suppose to pay it and how much the total cost will be.

 

To Pay for Educational Loan

 

One main problem of individuals is planning how to pay-off student loans. Records show that delinquencies and defaults in paying off educational loans have risen these past few years. BORROWING money with low interest such as a personal loan can help resolving resolve student loan problems.

 

Consolidating all of your other High Interest Debts

 

One good purpose in taking out personal loan is to use it to consolidate your high interest loans into a single debt. By paying off all of your other debt, you will be able to manage your financial liabilities more effectively and efficiently. Consolidating most of your debt can also help you boost your credit ratings. This is because consolidation of your credit account will mean being able to restructure your loan in a manner by which you can repay them all. One of the best things to do with personal loan is to use the same to pay off credit card debt. Paying off a sizable amount of your credit card balance is also a good way of raising your credit rating.

 

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