Alabama law firm starts a petition demanding a reform of the payday loans Six graphs revealing big problems for student and car loans
Whether it’s a student loan, car loan, mortgage or something else, almost everyone takes out a loan at some point in their life. Unfortunately, many borrowers make costly mistakes when registering for these loans.
Do not read before signing
Large loans usually come with large documents. When I took out a mortgage in my home, the company’s representative handed me a stack of six inches thick for examination. Yes, going through such a mountain of legal documents and disclosure is not fun, but finding the time to review these documents carefully now can save you thousands of dollars in the future. This certainly adds time well spent.
If after reading this whole legal material you do not understand something or want to clarify a point or three, make sure that you get the answers you need before you subscribe to the dotted line. The person selling you a loan is probably worth it to get a thick commission from him, so consider this your way of making him provide a value at least equal to what he will do with you.
Start of debt immediately before applying
One of the most important factors that creditors are looking at is the ratio of your debt to income. They want to make sure that you have enough money to make payments on a new loan in addition to the debt that you already pay off. So, if you are recruiting a ton of credit card debt, buying a house in the form for sale, and then applying for a mortgage in a new home, you may have a problem with obtaining a loan. If you are planning to issue a large loan in the near future, and you already have a significant amount of debt, do your best to pay off the debt and resist the impulse to add more debt until you receive a formal loan approval.
Do not go shopping
A loan is a loan, right? Not really. Different creditors have different ideas about how an ideal borrower looks, so they evaluate certain factors compared to others when they make a proposal. And some lenders will be particularly pleased to open more of a certain type of loan, so they will be willing to offer sweet deals for borrowers interested in these loans. In this respect, if you already have products or services with a particular lender, they can offer you a package deal on a new loan. Therefore, try to get quotes from several different creditors before making a final decision.
Not having all the documents
Before they give you thousands of dollars, loan underwriters want to know about you a little more than just your credit rating. Mortgage lenders are particularly interested in background information and will want to see documents ranging from stubs of payments and W-2 forms to bank statements and canceled rent checks. And each creditor will have to confirm your identity; Some will be satisfied only with a driver’s license or state identity card, while others will want to see additional documentation, such as a social security card, birth certificate or passport. In the worst case, the lack of necessary documentation may force you to apply, possibly losing the chance of a better interest rate if the rates go up at the same time. If you do not know what to take with you to a meeting on credit, call the lender and ask what documentation they need.
Orientation only on the interest rate
Lenders are more likely to compete with the interest rate than any other function. The lender, offering a particularly good interest rate, will fine the course for all of his ads. And borrowers often agree with this way of thinking, making the interest rate a decisive factor when comparing loans. However, there is much more credit than just an interest rate. You should also consider:
- How long is the loan term?
- How much are the payments?
- Is the interest rate fixed or variable?
- Is the rate guaranteed only for the first year (and in this case you can expect it for the year 2)?
- What fees are charged to the lender, both in advance and during the repayment period?
- Is the loan secured or not?
The importance of each factor will depend on your priorities and the current situation, but you, at least, need to know the answers to each of these questions for each loan that you are comparing. Thus, you can be sure that you get the best deal.
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