Getting a loan can “save the day” or help seize new opportunities. If you're running out of money, a loan may be the ticket to a good life. However the loan must be sought intelligently following the loan rules. If you're not sure what the rules are or whether you'll be allowed to borrow, try these steps:
Step
Part 1 of 4: Look Good
Step 1. Fix your credit report
A credit history is a record of your behavior regarding how you borrowed money and paid it off, and is a factor in obtaining a loan. Three credit offices (in the United States) – Equifax, Transunion and Experian – store and maintain your historical information, including account name and number, type, open/close date, credit limit, credit balance, monthly payments and late payments. Also, information on work records, how many times you've asked for a loan and from whom, billing accounts and overall assessment.
- Ask for a copy of your credit report. You can request it for free every year. Contact them by phone, fill in the data online. Ask from the three offices above, because each office has different information from the others.
- Review credit reports and look for negatives. This includes late payments, over-limit balances, fees and overall ratings.
- Fix the negatives on your credit report. You may have to report an inaccuracy by the credit office, or you may have to pay a bill.
Step 2. Get your credit score
In addition to getting your credit report, getting a credit score is a good idea. The borrower will provide you with several credit score schemes according to your loan. If you fall into a scheme based on your credit score, the chances of the loan being approved are greater. On the other hand, it will be difficult for you to get a loan if your score is below the credit score scheme.
- With a credit score of 640 you will generally get a good loan. If it's under 640, you may have a hard time finding a lender who won't charge your leg or arm to get their money back.
- If you want to improve your credit score, there are several ways you can do it. This includes getting a better debit to credit ratio, paying past bills, opening up some good credit, and a few other ways.
Step 3. Have a steady income
Income is as important as a credit report for obtaining a loan. Not only do you need a source of funds for loan approval, but you need a stable record of income. The more stable your income history is, the better the chances of getting a loan.
Step 4. Collect documents
In order to get approved, you must demonstrate the ability and good faith to repay the debt. You must provide supporting evidence of this quality in the form of credit reports, bank statements, tax reports and so on.
Part 2 of 4: Seeking Loans
Step 1. Find out about the type of loan
You can choose to apply for a secured or unsecured loan, and the type you choose will have an impact on the subsequent process. You will usually get more funds with a secured loan than with an unsecured one. Here are the basic differences between the two.
- Guaranteed Loans. Some borrowers generally require that you share the risk the borrower faces. This means that you have to issue collateral, for example in the form of a certificate (house or car). Pawnshops and Credit are examples of loans with collateral.
- Unsecured loans. This is a type of loan that is usually smaller than a secured loan and does not require collateral to obtain loan approval. Credit cards and cash loans are examples of unsecured loans.
Step 2. Be careful with cash loans
Most cash lenders offer personal loans, but only for a few weeks after you borrow. Unfortunately, because most cash loans are unsecured, and cash borrowers are loan sharks, you can be charged 300% to 750% interest on the loan amount. If you need an example of how crazy that can be, take a look at this:
For example, for a 5 million loan, you imagine having to pay IDR 140,000 or about 6% interest. However, on a cash loan, the amount to be paid can reach IDR 1.2 million for two weeks, with an interest rate of around 400%. That is a very large number
Step 3. Determine the amount of money you want to borrow
The size of the loan can help you reduce the choice of borrowers. Also, it's important to determine if you can afford to repay the loan amount you need.
Step 4. Find a lender
There are various ways to get a loan. Consider the following options, depending on the type of loan needed:
- Social lending network. Groups in which members determine their own terms of membership. Once a member, you can apply for a loan, on their terms. Generally these networks offer low interest rates and are good for small and personal loans.
- Financial Institution. Banks, for example, have many types of loans, including personal loans, credit cards, car loans, mortgages, and small business loans. Obtaining a loan with a financial institution will require more qualifications than other methods, but you can apply for a larger amount.
- Cash Lenders. These lenders offer an easy and fast approval process, but-as noted above-they provide loans in small amounts at very high interest rates.
- Friends and family. You don't have to always go to a business or institution to get a loan. Try looking at friends and acquaintances who may be able to help you finance your with a formal payment agreement.
Part 3 of 4: Applying for a loan
Step 1. Decide where you will borrow from before submitting an application
This step is very important and this is why. Applying for a loan can make your credit score worse, which in turn can reduce your chances of getting a loan. Why this happened? Every time you apply for a loan, the lender will check your credit score. Every time your credit score is checked, your credit score can drop. With a lower credit score, you'll have a harder time finding a lender and will get worse rates.
Find out the loan interest first before you apply for a loan. Of course, the borrower will ask you to submit all the documents before making a personal offer. If this happens, tell the lender that you can take your business elsewhere if they don't explain the interest on the loan
Step 2. Apply for a loan
A big part of the application process is the preparation – the introduction to the actual application process. Once you have calculated your ability to pay debts, gathered the necessary documentation and decided on a lender, you will need to fill out an application. The lender you have chosen will tell you what to provide and what documents to sign.
Step 3. Wait for the lender to contact you
Depending on how fast the credit check is and the standard of the lender's processing, the process generally takes 5-10 business days before your loan is transferred to your bank, if you accept it. Be prepared to answer questions and provide lenders with personal information to ensure you get the right decision.
Step 4. Pay the requested fee
Generally, once you get a loan, there is an associated fee that you have to pay. This fee varies from one lender to another, but generally you should pay from 0.5% to 5% depending on your credit level.
Part 4 of 4: Paying Your Loan
Step 1. Make sure you are aware of all the time limits to avoid lowering your score
Now, the hardest part is over, another hard part begins. You can feel free as soon as you get the loan, and you can feel relieved, but that's not the case. Paying your debts on time is very important:
- If you want to make sure you will get a loan in the future, they will look at the loan history. If your loan is not repaid over time, your credit score will worsen and your chances of getting a loan will be slim.
- Most people feel they won't need a loan again in the future, when at some point they will. Don't ruin the possibility of getting a loan in the future because you just believe you won't need it or are lazy to pay.
Step 2. If you're having trouble paying off debt, try talking to the lender directly
Talk openly about your difficulties paying off debt. Most likely, lenders are required by law to treat borrowers fairly and patiently. The lender should work with you to come up with a new repayment plan, as it is in their interest to get the loan back rather than nothing.
