Do you want to save money on loans? Here are three questions to help you better understand how lenders evaluate your loan application and how you can choose the best low credit score loans or no credit score loans available.
Understand the difference
…between no credit score loans and low credit score loans.
The former is given to those who have below average credit score, while the latter is given to those who have no credit history at all. If you never had a credit card and never got into debt, and you have no entries whatsoever in your credit report, lenders may not easily entrust you their money. The reason is that there is no way for them to gauge your creditworthiness or the way you manage your debts. In the same way, someone who has done a poor job in meeting his or her credit obligations may be rejected right away by mainstream banks because of their high credit risk, or the risks of not being paid back, on the part of the lender.
How much money do you need?
It is important to determine how much you really need before applying for a loan. Lenders may easily approve loan application of someone who wants to borrow $5000 than someone who wants $25,000. It is also important to pin down the accurate amount you want to borrow even before you apply because it sends a message to the lenders that you know exactly what to do with your money. A borrower who knows how much he needs is someone who also knows how much he can afford to pay within a specified period of time. But, there are things to consider when you intend to borrow money:
1.Give allowance for contingencies.
Unexpected things can happen anytime, and if you will only borrow the exact amount you need, you may have to borrow money again when an unexpected event happens. For example, if you are expecting to receive accounts payable every 15th day of the month, make sure that you have enough working capital to meet your business expenses until the 30th. You can also set aside some money to fill up your emergency fund, even for the time being, so that you don’t have to dip into your working capital to make both ends meet.
2. Borrow a little more than enough.
You do not have to go back to the lender when you realize that there are still other expenses to meet. How much is enough? It is the right amount you need to pay for the actual anticipated expense, with a little allowance for extra costs that may come along the way. But, it should not be more than half of the intended loan. Otherwise, you may just spend it on trivial things.
3. Choose a loan product that provides you with the right amount you need.
You may have to choose between lenders who provide similar terms and fees. But, look closely into the allowable amount. Would they charge you with a higher interest if you add a few hundred dollars on the loan?
4. What are you going to do with the loan proceeds?
It is important to describe how you plan to spend the money. List the categories and the expenses for each of them. For example, if you are going to buy equipment, list the cost and its use. Or, if you intend to use it for your inventory, write down each cost. There are many lenders who are willing to provide you with no credit check loans or low credit check loans without asking where you intend to use it, but you may have to pay a very high interest rate. So, if you want to save money—take time to look for a lender that will meet your borrowing needs at an affordable cost.
Which one should I choose?
It depends on your credit history, your needs and your plan on how to spend your money. Loans for People with Bad Credit are always available. But, always remember that you will eventually pay for it. And if you want to save money in the process, make sure that you do the following things:
Create a budget
It will help you spend your money on necessary things. If you intend to use the loan for your business needs, make sure that you don’t spend it for personal purposes.
Pay on time
You can save more money in the process, if you avoid late fees and penalties caused by missed payments.
Choose to save no matter how hard it gets
You may be tempted to charge purchases on your credit card, or to get another loan to meet your needs—but before you do it, do everything possible to meet that need using your current financial resources. Only when there is no other way for you to do so, should you resort to getting another loan.