Factors to Consider when Securing a Loan
It is a big decision to secure a loan and it could lead to grave consequences for an individual if they fail to adhere to the terms given. Therefore, this is not something that you just wake up one morning and decide you are going to take. In addition to being careful about how one goes about securing a loan, the absolute certainty that one actually needs the loan is also required. After carefully thinking about it and being absolutely sure that a loan is what you need to help you out of your current situation, here are a few guidelines to help you through the getting a loan process.
The type of loan you want to take. There are two main types of loans; secured and unsecured loans and one first needs to decide which of the two loans he or she would prefer. A secured loan can only be taken by offering collateral worth the loan you are taking and is usually offered more quickly, it is also a good option if you have bad credit history. One has to have a very good credit history to take an unsecured loan as this is usually offered without any collateral.
You should also consider the interest rate that is being offered. You will probably have longer repayment period if the loan has lower interest rates. Therefore, it is advisable to take a reasonable interest rate with respect to the loan you are taking even if it is a bit on the higher side.
Another important factor to consider is the floating rate. The meaning of a fixed or floating rate is that you will be paying an exact amount of money every month. Fixed rates area mixed blessing because, on one hand, you will be knowing exactly how much you will pay each month but on the other hand, due to the varying annual interest rate, you may find yourself paying more or less interest depending on the variation.
Caution also has to be exercised to be able to notice any hidden charges or any hidden terms. Read through your print-out thoroughly before you put your signature on it. Pre-payment penalties where you have to pay a certain fee when you pay your loan earlier than agreed is one of the hidden charges by some lenders.
You should be absolutely sure of your decision, therefore, before you pen your signature on that contract to avoid any regrets in the future. This is because when you become unable to repay the loan, the collateral will be taken immediately or the bank may take ownership of all of your property or sell them till they get back their full amount.