Thursday, 9 February 2017

Hacks to Choose the Right Lender

If there is a need there is a loan! Well almost! So regardless of what you want there are loans that can help you meet your financial needs, most of the time as long as you fulfill certain conditions and of course as long as your desire is within the purview of reality and practicality. There is a home loan that can help you buy a house, an auto loan for a new vehicle, education loan to continue your higher studies and a personal loan for things that do not fit in one of the above categories. There are different types of loans and numerous lenders. Well you know which loan to opt for depending on your needs but which lender should you choose? Here are a few ways that can help you choose the right lender:
v  Look at Your Credit Score
Before looking at lenders, a good place to start your quest for the right lender is assessing your credit report. A look at your Credit Information Report (CIR) ahead of applying for a loan or looking at lenders can help you tremendously. By looking the report you will be able to assess if you are eligible to get a loan or not; most main stream lenders look at the credit score as a starting point to determine if the loan application can be accepted. If your score is good (above 750) then you have nothing to worry about and can approach any lender without a worry. Score lesser than that lower your negotiating power but a score till 650 is generally not a cause of worry. For scores less than that you may have to look at co-operative banks, private lenders etc or agree to pay higher interests. Of course the best thing would be to try and increase CIBIL score if you have the time to do so and can delay you loan for a while.
v  Research, Research and Research:
There is neither a substitute nor a shortcut to this one and in today’s world researching for the required information is not difficult. There is a lot of information available online and offline too. With the available information you can find out about lenders, their terms and condition and whether you match them, the interest rates at which loans are available and also the turnaround time taken by the lender to approve and sanction a loan. It makes sense to go to a lender who will be willing to accept you loan application based on the eligibility criteria and credit score and the lender matches your needs too. So if you need an instant personal loan and the lender has a turnaround time of 4-5 days then it makes no sense to approach such a lender.
v  Understand the Fine Print:
As they say God is in the details, so just don’t look at the interest rates and loan tenure when choosing a lender focus on the fine print too. This includes finding out about all costs that are to be paid upfront or later for a loan. This may include expenses like processing fee, legal fee, fore-closure charges etc. Some times in the case of a home loan an insurance policy may be bundled with your product without you being aware of it. Later you may realize that buying a home insurance policy might not be the only way to provide security to you loved ones, there are other options available too.  Check about approval time and other not so clear terms. Choose after you have clarity about all the policies and their implications. Talk to friends, co-workers and family members to find out about their experiences.
v  Compare Rates/Terms:
This goes without saying; the first thing anybody would do is to check the interest loan rates when choosing the lender. However looking at rates is not sufficient, it also important to find out if the rat is fixed or floating or semi fixed and what method of rate calculation is used? Is the interest calculated of flat or reducing balance basis? Generally loans that are available at fixed rate at lower interest rates but in the long run they could be more expensive then reducing loan rates. A loan calculator can be used to calculate the difference between two options.
v  Talk to a Few Lenders Before Choosing One:
Even if you have researched online and you think you have found the right lender, do get in touch with a few lenders before making the final choice. Do not apply at different places as this will lower the credit score due to hard enquiries but you should talk to the bank representatives to get a better picture of what is available and if your understanding is in the right direction. This will give you a better perspective and help you in making the right choice.
So whatever you need, choose the right lender with the help of above hacks. Choosing the right lender can help you save a lot of money and a little trouble too!

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