Life is full of goals to achieve and unforeseen events to solve. On the one hand, you need to plan and set goals and on the other hand, you need to be prepared for an unusual event that can throw your financial health off balance and have you having a hard time. In either case, it is important to be able to apply for and get a loan. This financial tool will give you support when you need it, but you need to make sure that you are using this funding correctly so that you don’t have any problems. In the rest of this article, we’ll explain how to properly prepare for getting a bank loan for sure.
Prepare your loan application
A credit is granted after analyzing your ability to pay, but you must return the total money you loaned plus the interest that has been accumulated during the term of your financing. To obtain a loan, it is important to build a good banking history. It is also important to be well informed in order to obtain the best reimbursement conditions.
For example, you should know that it is possible to find cheaper mortgage insurance from an outside insurance company that does not belong to the lender. This allows you to save money and lower your monthly payment and it is completely legal.
Provide a complete file
Before applying for a loan, to make the process faster: it is in your best interest to provide all the information requested the first time, as any clarification can mean a delay in the process. Please note that the information required depends on the type of credit you are requesting.
Take note of the contract
You should read the credit agreement from start to finish. Check whether there are any additional penalties or charges, as well as whether it is possible to pay your credit in advance (prepayment).
Carry out simulations
By running simulations of your loan, you can check the number of payments to be made, the amounts of each and the dates committed. You will be able to know the behavior of the credit and how much you will have paid in total when it is finished. Online simulators will allow you to do this easily and give you an idea of the credit flow from A to Z. It will also allow you to check your repayment capacity in the long term.
Choose the right timeframe according to your ability to pay
If you choose a long term to have less monthly payments, you will end up paying more interest. On the contrary, if the repayment term is very short, contributions could use up a lot of your resources each month. You have to calculate how much you can really pay each month to set this parameter and thus maintain an excellent credit history.
Don’t ask for more money than necessary
One of the worst mistakes in managing money is forgetting that everything that is asked must be paid back, so just ask for what you need. The extra money will keep you in debt longer and with higher interest payable.
Choose a tax type according to your profile
Variable rates may be right for you, but they are risky when adjusting half the financing. If you want something more secure, choose a fixed rate that will stay the same for the entire period, it will be easier for you to follow it and give you more stability. Consider which one you feel most comfortable with, and find the credit that offers you a competitive rate with the best repayment terms.
Never be late
It is very important to pay all costs within the time limits that have been fixed in the contract. If you miss the payment deadlines, you will be penalized with higher commissions and interest. Before borrowing, follow these recommendations and find the ideal financing to achieve your goals. Remember to be responsible and immediately withdraw your contribution amount from your monthly income.
In case of refusal of credit
If your credit application is denied, there are several things you can do on your end so that you can apply for a loan again later and get a positive response. You can therefore:
- cancel other outstanding debts;
- establish a financial plan;
- decrease spending ;
- remain in office for several months or a year;
- correct the incorrect information at the time of the new request.
Keep in mind that these tips will help you improve your profile for financial institutions. In this situation, the help of a credit broker could be of interest to you. Indeed, this professional can help you obtain a loan more easily.
Be aware of your ability to take on debt and, if possible, avoid becoming a defaulter. For this, it is necessary to carry out a financial plan with the help of a broker in which it will be necessary to assess both the inflows and outflows of capital. Also consider whether your profile has a good debt-to-income relationship. To identify this, apply the following formula:
- debt capacity = fixed charges / monthly income x 100
The result of this equation will guide you as to how far you can borrow and what is your ability to do so. You should know that the ideal debt ratio is 33%. Any line of credit that exceeds this value will be out of your reach and will therefore be refused. Remember that having a debt level that is above your ability to pay can become a huge problem for your financial and family circumstances.
After checking your debt capacity and putting your situation in order, you can reapply for a loan. If your file is solid and meets the bank’s requirements, you will certainly be granted credit. We remind you that to facilitate the whole process, you can use a credit broker. This will certainly allow you to get a favorable response more quickly.
Read also : How to establish a good mortgage financing plan for the bank