[ad_1]
Nowadays, you can get loans from banks and private lenders. However, when you apply for the loan, you need to follow some important points which can help you compare short term loans. Given below are 8 factors that should be considered while comparing loans.
loan type
First of all, you need to consider what type of loan you require. For a short term personal loan, you do not need to submit your collateral deposit. All you have to do is show your income statement and business proof.
On the other hand, for business loans, it is important to mention the purpose regardless of the loan tenure.
You need to analyze the purpose of your loan amount. Loans can be taken for various reasons. It can be a wedding loan, holiday loan, payday loan, student loan etc. Choose carefully with regard to your needs and requirements.
Rate of interest
Another factor to consider when comparing is the interest rate. Different interest rates are offered by different private lenders and banks. If you have a poor credit rating, you may be charged a higher interest rate. Hence, it is essential to compare loans before settling for your final option.
loan term
Generally, people apply for short term loans as they need to meet their short term or urgent monetary issues. All they do is use the money and pay it back within 12 months. But if you find a loan that has a lower interest rate, you can find out the EMI and then compare it with other loans. It is not necessary that an individual has to opt for the loan for 12 months. The borrower can decide the tenure based on his repayment capacity.
hidden charges
While applying for a short term loan, make sure you know all the charges. Typically, lenders charge a variety of upfront fees, such as credit report fees, processing fees, admin fees, underwriting fees, appraisal and origination fees. Ideally, you may want to avoid these charges. Choose a broker or lender who does not charge any upfront fee as this will help you save money.
advanced payment
You may have to make a down payment for a short term loan. While these loans do not require a down payment, a home loan or a car loan requires an upfront payment. This amount usually ranges between 5 to 10% of the loan amount.
Some lenders may also provide 100% finance facility. In this case, you may have to pay additional interest. Hence, you should find out and compare the amount of interest and then make a choice.
Return
Make sure you ascertain your repayment capacity before applying for a short-term loan. You may have to pay a hefty EMI and ascertain your repayment capacity. It is wise to map out a repayment strategy as irregular payment behavior will hurt the credit score.
credit rating
Your credit rating plays an important role when it comes to availing short term loans. If you have a bad credit score, make sure to work on your credit rating first. For this purpose, you can approach your tax consultant as he can help you build your credit score. If a lender charges a low interest rate despite your low credit rating, go with them. Also, regular repayment of the loan on time and in full will also help in building the credit score.
secured loan
Secured loans can be a good option for you if you can repay your loan within 12 months. In this case, make sure that you have got your property papers or property mortgaged to the loan provider. Once this is done, your loan will be disbursed in a few days.
So, if you are in need of a short term loan, make sure to consider the 8 factors mentioned in this article. They will help you get the right kind of loan and at the same time avoid the most common mistakes. Hope you will be able to get the right kind of short term loan with these tips.
[ad_2]