Tag: secured personal loans

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Personal Loans

Questions to Ask When Applying for a Personal Loan

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Whether you want to go on a holiday, pay for medical bills, buy a new car or renovate your home, a personal loan can help you achieve whatever your goals are. Before you jump right into a fast loan application, it is important to ask the right questions. We’ve mustered up a list of some key questions to ask when applying for a personal loan.

Here are 4 questions for those considering personal loans

Is it the right loan for me?

People use personal loans for various reasons. Before you apply for one, determine whether or not a personal loan is the right loan option. Some of the main uses of a personal loan include;

  • Paying off medical bills
  • Car repairs
  • Home renovations
  • Wedding
  • Debt consolidation.

Compare loan products and make sure that your choice can serve your needs better. For instance, you could take out a debt consolidation loan instead of a personal loan to pay off your existing debts. If you want to renovate your home, you can tap into your home equity and possibly get a better rate than a personal loan. Research is therefore key.

What is my borrowing capacity?

One of the first questions to ask when applying for a personal loan is how much can you borrow. As with any loan, there is a borrowing capacity for each individual. Whilst personal loans are typically smaller in size, in comparison to a home or business loan, there is still a limit as to how much someone can afford to borrow personally. This limit will depend on various factors including income, expenses, debt, residency status and credit score.

So, before you rush into applying for a personal loan, you should consider establishing a budget. Determine how much you can afford to borrow by looking at your income and expenses. Use this handy online calculator to quickly create a budget plan.

Am I choosing the right lender?

There are many financing sources that offer personal loans and each source has its own range of interest rates, and terms vary. Find the best lender that fits your needs by shopping around.

Here are some tips in finding the right lender:

  • Start by asking someone close to you that has recently secured a personal loan. See if they can recommend their financing institution. You can also ask a financial adviser, to give you a shortlist of referrals.
  • Visit your lender’s website and investigate their offerings for details. At the Australian Lending Centre, we have loan experts online to tell you about the basic things you need to know about our loan products. We believe that advertising is glittery; so we will help you look beyond the advertisement and find out about eligibility requirements, fees, and other features of our personal loan product. Don’t be afraid to enquire online. We’ll explain to you the best options available, without placing a credit enquiry on your credit file.

Finding the right lender can help you get the most favorable loans to finance your needs. Remember that personal loan lenders not only originate, process, approve and close your loan application but also participate in one of the most important financial decisions you will make.

What are the terms of the loan?

Look into your obligations whenever you apply for a loan. Always read the fine print and ask for a full disclosure of the terms of the loan before you sign it. Don’t forget to ask about the monthly payment, the term of repayment, late fees and penalties for prepayment. When the lender offers lower interest rates, check on the origination fee that can eventually hike your interest rate.

What are the fees associated with a personal loan?

Find a lender that is transparent with their loan services. Make sure to look out for the establishment fee, servicing fee, early exit, early repayment and insurance fees. The last thing that you want is one of these hidden fees appearing in the fine terms of the terms and conditions. Take the time to consider these fees when assessing your personal loan options.

Are there different types of personal loans?

Personal loans can come in two main forms; secured or unsecured. The type of personal loan that you are offered will vary depending on each individuals personal circumstances and eligibility criteria. A secured personal loan is one that is guaranteed by an asset. The idea behind this is that if you default on your loan, the lender can take the asset if you default on the loan. Collateral can include anything from real estate property, motor vehicles or other property. This will vary depending on the lender.

What is my credit score and can it impact my chances of loan approval?

When was the last time you checked your credit score? Do you even know what a credit score is? If your answer to both questions is known, then you really need to quickly learn all about this. With lenders now stricter than ever, your credit score can directly influence your chances of being approved for a loan. Lenders will look at your credit file to assess whether or not you are capable of repaying a personal loan back. With the comprehensive reporting system in place, lenders can also look at your repayment history to see if there are late repayments. All this along with defaults, blackmarks and court judgments can be assessed by a lender.

Checking your credit score is, therefore, one of the most important things to do before you apply for a personal loan. Fortunately, you can access this online through credit reporting bodies such as Equifax, Ilion and Experian. At the same time, you can have a credit specialist assess your credit file for a small fee. Repair agencies such as Clean Credit offer a comprehensive analysis of your credit file.

How often can I make repayments on my personal loan?

One of the more important questions to ask when applying for a personal loan is how often can you make repayments. Depending on the lender, you have various choices of repayments. Whilst traditional lenders such as banks are typically stricter with their repayment policies, alternative lenders are not. Lenders such as Australian Lending Centre and Bad Credit Loans offer customers weekly, fortnightly or monthly repayment terms. So, before you apply consider how you will be making payments. If for example, you are paid on a monthly basis, it may be more convenient to make monthly payments. In this case, find a suitable lender.

Categories
Debt Consolidation

Secured Loans: Planning Ahead

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Secured Loans

Secured loans are debts that you secure with a collateral-like a home, car or any other property. In case of defaults, your creditor will take possession of the assets used as collateral and may sell it to recover the amount they loaned to you.

Because you are granting your creditors a portion of your rights to a specified property, it is important to consider several factors before you get a secured loan.

How do you prepare for loan applications so that it becomes a solution rather than a problem?

Let’s start with the things you wish you had known before you signed up for mortgage, home equity loans or your credit cards.

 “They said it’s a low-interest loan, but my debt keeps growing and so is my interest rate.”

“They told me I have zero interest in 1 year, but my credit card statement says otherwise”

“I took out a second mortgage to help me pay for my first mortgage, but now – they’re the one filing for foreclosure.”

A secured loan is a contract, and not a leap of faith. So, there should be no surprises at all. You can always avoid them – even the most difficult ones by following these steps.

know-the-company

Get to know the company.

The most important thing when you’re getting a loan is the company itself. You are borrowing from a lender who has the right to go after your property. They have the right to make you homeless when you miss payments. If a company has a good reputation, keeps up with its promises and puts their customers’ interest on top of their own – then you have nothing to worry about. But, if you are not sure whom you are dealing with, there’s a big chance that they will run away not only with your hard-earned money but with your collateral as well.

Preparing for a loan, is largely about two things: making sure you are dealing with the right lender, and making sure you know what you are getting into.

Read before you sign and communicate doubts

If you don’t understand the terms of the loan agreement, don’t sign them without asking for a detailed explanation of what they are. No matter how urgent is your need for cash, take time to read the terms of the loan, and ask questions about certain provisions that you don’t understand.

You have to be able to talk to your loan officer about important things that will have a huge impact on your future finances, such as the interest rates, the late penalties and how much you’ll end up paying if you miss payments for several months. Good communication is key, not only to personal relationships, but to a business relationship with your creditor as well.

You can go deeper to issues like-what happens when I default on payment? What are the procedures that the company will do to collect payment from me? Will you send my account to a collection agency? We don’t know what will happen tomorrow, so it is important to clarify things with your potential lender even before the contract begins.

track-spending

Track your spending

Your budget worksheet is not a wish list. It is a guide of what you are going to do with your money, in a smart way. When you create it, make sure that you track your expenses for at least 30 days. Record every purchase and every bill you paid. The moment you realized where your money is actually going, you can make an educated decision about how you can pay for a secured loan. Many borrowers make the mistake of becoming too financially impulsive, that they take out loans, put their homes and cars at risk, without thinking about how they can adjust their budget to make way for the monthly repayments.

Here’s another tip when setting budgets. Do not deprive yourself of simple pleasures that will make your life boring. You may end up sabotaging your own budget and losing the interest to earn money. Self-deprivation is the easiest indicator that your budget is doomed to fail. Instead, allocate your money wisely. Moderation is important even in saving money. If you’re going out every week, you can try having fun with your friends every 2 weeks or you can still do it every week, but in a cheaper way. Instead of going out, how does a home cooked meal sound?

Consolidate your loans.

It is the easiest way to ensure that you can pay on time. Having multiple debts to pay is a bit confusing and overwhelming especially if your budget is tight. If you want to get ahead, a debt consolidation plan can help you pay down all your existing debts, save money on interest payments and set them aside for savings.

Learn more tips on how to use your secured loans wisely by making an enquiry today!

Categories
News

What Is A Secured Loan And How Does It Help Your Credit?

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While it may take time to build your credit score, getting a secured loan can help you improve your credit and boost your credit score.

Secured loan defined

A secured loan is a debt linked to your property. So, if you have a home or you are buying one, you can get a secured loan. The amount of which depends on your free equity in the said property, or the difference between the amount you owe and the value of your home. The duration of the loan and interest rates also depend on your equity, as well as on your credit score and other personal circumstances.  Many lenders approve secured loans quickly because they are less risky.

Why do I need a secured loan?

  • Your credit score will definitely reward you for paying revolving debts

If you want to rebuild your credit history, you can use your own assets to do it. A secured loan will show up on your credit history as an instalment loan that you have to pay on a monthly basis.
Therefore, by paying off instalments, your secured loan can definitely help your credit rating. You can also use the proceeds of your secured loan to pay for revolving debts like lines of credit and credit cards.

  • Make micropayments to lower your debts faster

Use the proceeds of your secured loan to make small payments to your credit card balance, even before they fall due. It will lower the debt utilization ratio or your total debt divided by your credit limit. So, if you keep that at around 30-33%, your credit rating will eventually improve.

  • Transfer multiple debts to a secured loan. Consolidating all your credit card debts under an instalment loan can improve your debt-to-credit ratio or the amount of money you owe versus your available credit.

Whether you’re living from paycheck to paycheck or you’re earning big time, you should know that the only way to build your credit is to establish your ability to repay your debts, on time. One way to do this is to get a secured loan and create a sound financial plan to manage it wisely.

Three important steps of sound financial management

Do you know why a financial plan is so vital in overcoming debt and building wealth? It may seem to be a boring financial drill, especially if you feel you don’t have enough money to put your financial life in order. But you can never underestimate the value of a sound financial plan, especially when it can help you achieve your financial goals.

  • Determine the amount of secured loan you need and other financial sources you have. When you choose to get a secured loan by using your home as collateral, the amount of equity you’ve built up in your home is one of the factors that determine the amount of loan you may qualify for.
  • List down where you want to spend it on. Prioritize spending.
  • Plan how you can best allocate your money.

Consider applying for a secured loan at Australia Lending Centre. ALC has less stringent lending criteria for people with bad credit. They got reasonable loan terms too!

So, what is a secured loan? It’s one of the options that could get you out of the financial mess.

Contact the Australian Lending Centre today!