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