The proliferation of fintech and financial services in recent years has often meant that anyone, irrespective of their background, or circumstances can get access to credit when necessary. That being said, however, loans come in different shapes, and while they play a pivotal role in enhancing one’s quality of life, they can be just as detrimental to the financial well-being of borrowers in the case of wrong choices.
Given the wide range of options available for borrowers, there really is no reason to settle for something less than what you deserve. With a bit of effort into research and analysis, borrowers can find deals that perfectly align with their individual circumstances. In this article, we cover four such tips, tricks, and strategies to find and apply for the right loans that serve to enhance your financial future.
Before you even begin hunting for a loan, make sure to have a clear picture of your finances, your income, expenses, assets, and other current liabilities. This should help you better understand where exactly you stand, and whether you have sufficient disposable income to pay back the loans on a monthly basis. This is also referred to as the fixed-obligation-to-income ratio (FOIR).
This also includes getting your credit score reports, and if that has been unsatisfactory, there are ways to improve your scores within a few months. Ideally, it’s good to apply for loans with strong credit, not just for the better approval rates, but for better terms, APRs, and more, all of which can be less arduous on your wallet going forward.
Borrowers today aren’t just spoilt for choice when it comes to the number of financing sources, but even the marketplaces and comparison sites that make it easy to compare offers, terms, and rates before choosing one that best suits their needs.
Comparison sites have essentially driven a wedge through the financial services industry, pitting banks, fintech companies, and other institutions against one another, forcing them to compete for customers by offering lucrative deals and offers.
The power has effectively shifted to the consumer in recent years, but many borrowers still fail to use these sites, leaving plenty of value on the table.
If you have poor credit, it doesn’t necessarily mean that you are shut off from the credit markets. There are plenty of options to avail financing for various purposes for individuals who have poor, or even non-existent credit scores. In such a scenario, it would be better to consider loans that don’t run a credit check, often requiring either a co-signer or having significantly high APRs to suit the risk.
Such loans are never ideal, but if the circumstances demand, they can be a good source of short-term funding, irrespective of your background or credit history. A few services in this segment offer guaranteed income-based loans, which means, if you can prove a certain level of income, you can get a loan immediately, with no credit checks, or other unnecessary procedures.
When dealing with such services, it is best to stay on guard against predatory lending practices, often wearing the garb of payday loans. While still offering simple, effortless, hard-cash loans, these types of credit often come with excessive fees, penalties, and APRs that can lure individuals into a perpetual cycle of debt.
As simple, straightforward, and effortless as it might seem, most loans come with extensive terms and conditions that borrowers only understand after going through the fineprint. This includes additional fees, penalties, prepayment charges, and more, all of which could be detrimental to your finances if you don’t get a hang of it.
Certain terms and peculiarities may not suit your specific circumstances, such as a long turnaround time for loan disbursements, when you need funds right away. Going through them, and discussing with the lender can help you get on the same page, especially since most lenders are willing to work and accommodate borrowers’ needs to the best of their ability.
The evolution in banking and finance has ensured that there are loans available to suit every circumstance. For the discerning borrower, loans such as these only serve to enhance credit scores, and overall financial standings. However, the lack of financial literacy still leads individuals to the depths of economic despair, with high-interest loans, with excessive fees and penalties continuing to cripple them.
The availability of credit has long been known as the lifeblood of any economy, a tool that helps individuals leverage on their hard work, and leapfrog toward a better future. While there have been tremendous improvements when it comes to the availability, inclusivity, and quality of credit, there are still miles to go with regards to the effective usage, management, and paying back of the said credit.