It’s not all the time that we have money in our pockets or savings in our bank accounts to buy the things our hearts desire. May it be a closet full of clothes, a ticket to your dream destination, or the house you’ve been fantasizing about since you were ten. In times like these, applying for a loan is the wisest idea.
What is a loan?
A loan is something, usually an amount of money, that is borrowed and expected to be paid back with interest within a specific period of time. The different types of loans include student loans, mortgages, auto loans, personal loans, lifestyle loans, small business loans, home equity loans, etc.
If you’re a first timer loan applicant, it’s best for you to be aware of the basic information about loans including what a loan is, the types of loan there are, and the possible mistakes you should avoid at all costs. Money has a knack for just passing through our hands for just five seconds, so you should spend it wisely and save as much as you can. If you’re thinking of getting a loan, beware of three common rookie mistakes and avoid it as much as possible.
Mistake #1: Not fixing your financial status ahead.
Many people are excited about applying for loans that they forget to sort out their finances first. Your current financial status should be straightened out as these will affect the lender’s decision on whether they will approve your loan application or not. Be wise and check your finances ahead, acquire all needed requirements, and have your paperwork reviewed before getting a loan. Don’t risk staining your image and risk your chance of getting your application approved.
Mistake #2: Borrowing more than you can afford to pay.
Now, don’t get in over your head just yet and think you can already borrow a big amount of money. You have to know about the interest rates and all other things that has fees. Sometimes, lenders tend to persuade you into borrowing more. Don’t get pressured and fall for the trap. Yes, you might have the chance to have more money on hand but remember, it’s you will have to pay it all back in the end. If you get a tempting offer, think it through before agreeing to it.
Mistake #3: Paying for unnecessary things.
With loans, you will also be offered other services which you might be interested in. These offers may seem affordable, but it might add up to a big amount once accumulated. Make sure that your loan agreement only includes the ones you need and the rates you’ve agreed on. Before signing the papers, read and understand what is written and don’t hesitate to ask questions and clarify all the things you want to know with the lender.
All these are common sense mistakes that you can explain yourself but this is just to remind you to be careful when dealing anything related to money, most especially in applying for loans. Just learn from these mistakes and and you can say hello to your new fashionable clothes, desired destination and your dream house!