Tag Archives: credit ratings

How to Increase Your Odds of Landing a Loan

Loans are an important financial tool that comes in handy when money is needed but unavailable. Loans can be used to purchase a car, personal items, electronics, investments or even a home. Loans can also be used to clear debts or pay for items that are needed. So when cash is not readily available but is needed in substantial amounts, then it is important that a loan is considered.

There are various types of loans available to borrowers, the preference of which will depend on the intended use, amount sought, interest rate charged and ease of access. A common type of loan is a payday loan. A payday loan is a cash advance that is made available to people who have an immediate need for cash but do not have it handy. The cash advance is provided with the hope that it will be refunded using the paycheck proceeds of the applicant on pay day. To qualify for this loan, the applicant only needs have a regular source of income, such as derived from employment, a bank account and a valid identification and residential address. This loan normally charges high interest rates as it is unsecured and does not undertake any credit history checks.

Most loans require that the applicant has favorable credit ratings. This means that the borrower has a history of paying back any loans or credit advanced to them. Many financial institutions shun people with bad credit ratings. The reason is simple. The bank or other lending firm doe not want to lend its finances to people who might not be willing to pay it back. Having a good credit report is absolutely important when it comes to borrowing a loan.

Another important factor that is beneficial when asking to take out a loan is having a job or other source of regular income. A regular source of income basically guarantees the lender of the borrower’s ability to repay the loan, including other charges, fees and interests. Employed people, business owners and others with a regular source of income all stand a good chance of borrowing from financial institutions.

Having equity, assets, property or large amounts of cash and other liquid assets will stand a person in good stead when it comes to borrowing. Banks and other lenders will look favorably at people who own such assets. This is is good for two reasons. Assets may be required to act as collateral for the loan. Most lenders usually prefer assets as security for loans. Owning assets is therefore, very important when it comes to borrowing loans from financial institutions.

Holders of credit cards may want to pay off the balance on their credit cards before applying for loans. This is because this will improve their credit ratings and improve their credibility in the eyes of banks. People with good credit ratings can borrow larger amounts at lower interest rates.

Finally, lenders may also look positively towards people in stable families. For example, a married person is considered more responsible and is more likely to repay a loan granted to them than their unmarried counterparts.

Auto Loans Financing

Auto loans financing

Need to get a new car? But the cost of it doesn’t suit your current financial status. Then make use of auto financing. Auto loan or car loans are a common thing nowadays. A majority of banks have facilities to provide a variety of options when it comes to car financing. Thus from this we can know the position and growth of auto financing at present. However it is not as easy as it sounds, because people who opt for it must be wise to choose the best option for them so that in the future they don’t get debts.

The major factors which are taken into account while banks lend you a loan is the amount of down payment done by you for the vehicle. This is to make sure that they are at moderate risks covering for you and they don’t have to pay for the entire amount. A min down payment is only expected which is mostly 5% of the total cost of the vehicle. Thus more the down payment the more advantages you can get from the banks. Some dealers also exchange your old vehicles and take the price of the vehicle as a down payment. Thus if your old vehicle is in quite a good shape then you might get a good amount as down payment. After this the next important things which are looked upon are the credit ratings and the length of your loan period. The credit ratings are considered important these days by all prime lenders. Thus it shows the bank the risk involved in lending to the client and how good has he been with his bills in the past. If you have any mortgage loans the present status of the loans is also taken into consideration.

The loan period and the monthly instalments are the deciding factor which decided the total amount which you will have to pay for your car. If the loan period is long then the monthly instalments are less and thus many think that they can be able to pay the loan easily without getting any debts ate reducing their expenses that much. But they are mistaken the more the loan period the more is the amount of extra money you have to pay as monthly instalments. Your car dealers might have some tie-ups with certain banks and financing concerns which will offer you loans readily with lesser formalities. Although this might seem to be an easy option it is always better if you search for the offers which are better for you. This is because the credit ratings and the down payment might be used to negotiate with some financing companies and banks to get a lesser rate of interest. Thus you can get best options if you put on some effort which will turn out to be profitable at the end.

Overall the most important thing you must take into account is the amount which you will have to pay at the end including the amount for interest. Calculating this will help you whenever you have a loan offer. Thus you need to calculate and also analyze the future payments before taking a loan from any bank or lender.