Nopsacredit (Loan comparison)

6 things to think about before getting a loan

If you’re going to be applying for a loan or some form of credit in the near future then it is vital that you know certain information that will speed up the process and help to make you aware of your current situation regarding your finances. Sure, you may know several things without having to look into it (your income, expenditure etc..), but there are other factors that you must be aware of before you apply for a loan or finance.

1) What is your credit score & history? Having a good credit scores exemplifies to (potential) lenders that you pay your credit obligations on time. In short, the more favourable your credit score, the more likely you are to obtain credit and the better interest rates you’ll receive. Getting the best terms possible could potentially save you thousands - you’d be surprised at the difference a percent or two can make. If we take this example scenario: €50,000 loans paid over five years (60 months). Having a 5% interest rate would work out over €2,700 more expensive than a 3% rate - that’s a substantial sum of money. Be sure to check your credit score before applying, and if you find that it isn’t in the greatest of shape then hold off on trying to get the loan and work on improving it over time.

2) What is your income? How much you take home after tax every month (or how ever often you are paid), will have a great impact upon how your ability to make repayments on your loan. If you’re an employee you’ll typically need to provide several wage slips and possibly a letter from your employer stating your salary. If you’re self-employed then you’ll need to show two years books along with invoices, receipts and the like. 

3) What is your expenditure?: You must be aware of your total monthly outgoings to the last penny. If your monthly income only just covers your total outgoings then it highly unlikely that you’ll be able to pay off a loan or any form of finance. Loan applications will ask you to submit your outgoings, and if the lender sees that your expenditure is only slightly less than your income then your loan application is less likely to be approved. 

4) What assets do you have?: Potential lenders may want to view your net worth, I.e. your total assets minus your total liabilities. Assets are things that you own and are valuable, e.g. things you own outright (properties for example), and liabilities are your financial obligations such as mortgages, loans and things of that nature. It is important to know your net worth even if you’e not applying for a loan, as it will give you an insight into your current financial situation and may help to make wiser decisions when it comes to all things financial in the future. 

5) Who is your employer?: If you are employed then you’ll need to to submit this so be sure to talk to your boss about the correct department for the lender to contact should the need arise. Previous employers may also need to be contacted if you have recently changed jobs. 

6) Shopping around is vital! Never, under any circumstances, take the first loan that you come across - even if it seems like a good deal. It will take a lot of research to ascertain which loan type is best for you and your situation, so be sure to take your time and assess a plethora lenders before making your final decision. When doing this be sure to read the small print and any literature that explains the early repayment charges that may apply should you pay off the entirety of your loan early. Never rush and always take your time. 

For loan comparisons please visit: http://nopsacredit.fi