| Shopping for a loan is very similar to | | | | |
| finding a new home to buy. Since they both | | | | 3. Mortgage refinancing - a loan where the |
| are important financial decisions, it | | | | homeowner borrows money against the equity of |
| requires more than looking for the best rate | | | | their property to pay off bills, apply for a |
| or the easiest personal loan to qualify. | | | | lower interest mortgage (Mortgage refis- are |
| Before you opt to take out a personal loan | | | | tax deductible). |
| there are a few consumer smart - personal | | | | |
| loan strategies may consider adopting. Use | | | | 4. Equity loans - are lines of credit that |
| the following strategies to fine tune your | | | | can be taken out on a home with out affecting |
| personal loan decision. | | | | the state of the mortgage. (Depending on the |
| | | | terms of the financial institution, equity |
| 1. Know Your Credit Rating | | | | loans- are usually tax deductible). |
| | | | |
| Credit ratings qualify loan approval. | | | | 5. Personal loans - are all options you have |
| Understanding how your credit rating will | | | | to borrow money, and make one monthly payment |
| help a person qualifies for, Depending on a | | | | until you are out of debt. |
| credit score, there are specific personal | | | | |
| loans that are applicable to your situation. | | | | 6. Secured personal loans - are ideal for the |
| For instance, certain lenders specialize in | | | | consumer with collateral (in example: home, |
| extending sub-prime financing. (Sub-prime | | | | real estate property and certain specialty |
| loans carry a higher interest rate). | | | | recreational vehicles can be used as |
| | | | collateral). |
| 2. Organize Financial Documents | | | | |
| | | | 7. Unsecured Consolidation Loans - are a |
| For the loan shopper in need of a personal | | | | personal financial solution for the consumer |
| loan or debt consolidation loan, certain | | | | who does not have assets or own real |
| personal financial documents may be needed | | | | property. |
| for approval. Generally, lending institutions | | | | |
| request the following records: | | | | Advantages Versus the Drawbacks of Secured |
| | | | and Unsecured Personal Loans |
| - W-2 statements from the past two years | | | | |
| | | | Secured personal loans |
| - Federal tax returns from the previous two | | | | |
| years, | | | | Advantage: |
| | | | |
| - Investment and mutual fund documents | | | | - Lower interest rate on the loan |
| | | | |
| - Current and recent paycheck stubs, d | | | | - Ease in borrowing money |
| | | | |
| - Records that demonstrate other financial | | | | - Smaller Monthly Payments |
| sources (2nd job, commissions, interest | | | | |
| dividend income, bonuses) | | | | Drawback: |
| | | | |
| - Child support or alimony documentation | | | | - Longer repayment terms |
| | | | |
| - Home and vehicle titles | | | | - Risk factor involved in losing property |
| | | | |
| - Any other assets | | | | Unsecured personal loans |
| | | | |
| 3. Know Your Assets | | | | Advantage: |
| | | | |
| Before you begin shopping for a loan, | | | | - No risk in losing assets |
| understanding where you stand is the first | | | | |
| step to take. The first question of | | | | - Condensed payment terms |
| consideration involves, how much loan you can | | | | |
| afford. Add up your collateral. For example, | | | | Drawback: |
| if you have a home, car, and insured jewelry, | | | | |
| these items are assesses to approve or | | | | - Higher monthly payments |
| calculate a loan. | | | | |
| | | | - Heftier interest rates |
| - Determine how much you need to borrow | | | | |
| | | | 5. Search For a Personal Loan |
| - Review the current interest rates you are | | | | |
| paying. | | | | Selecting the perfect lender requires |
| | | | shopping around with various lenders. |
| - Analyze how much loan payment you can | | | | Obtaining quotes of lending products |
| afford. | | | | available for your financial leads will |
| | | | enable you to make the best personal loan |
| - Remember to budget your consolidation loan | | | | decision. Remember to pose questions |
| with a breathing space or leeway. It will | | | | regarding the penalties, surcharges and costs |
| prevent you from falling prey to | | | | for getting the loan approval. |
| over-extending personal finances - again. | | | | |
| | | | 6. Choose a Lender |
| Another important step to include in your | | | | |
| debt calculation is to tally all current bill | | | | The final step to obtaining debt relief |
| obligations: housing costs, credit card debt, | | | | starts with the selection of a respected |
| child support, car notes, alimony or student | | | | lender. Although the choice may be a bit |
| loans. Lenders believe that 36 percent of a | | | | challenging, consider the terms and risk |
| person's debt should account for 36 percent | | | | factors involved with each personal loan |
| of a borrower's pre-tax income. | | | | opportunity. Remember, just because a |
| | | | personal loan comes with an ultra low |
| 4. Research Different Personal Loan Products | | | | interest loan - doesn't mean that it's the |
| | | | best loan. |
| Since personal loans come in a variety of | | | | |
| flavors, researching different products can | | | | The four Steps for debt consolidation loans |
| help you find a loan customized to your | | | | Includes the following: |
| specific financial situation. To gain a | | | | |
| better understanding of diverging lending | | | | |
| product terms vary, review glossaries and | | | | |
| frequently asked questions (FAQs). | | | | 1. Applying for the loan |
| | | | |
| Various Classifications of Personal Loans | | | | 2. Loan approval |
| | | | |
| | | | 3. Modify your budget as debts are paid-off |
| | | | |
| 1. Debt consolidation loans allow the | | | | 4. Avoid accruing more debt during the |
| borrower to refinance or reorganize debt. | | | | consolidation loan process |
| | | | |
| 2. Mortgage - a loan to purchase property | | | | © All rights reserved. |