Bank loans may appear to be very helpful when there is a very pressing need for funds, especially when you want a ‘quick-fix’ solution that requires immediate financial liquidity for a any number of reasons such as paying off other loans (in the short run) or renovating a home or funding your child’s college education. However, taking such a loan is a very big responsibility indeed and must not be taken lightly under any circumstances whatsoever and such a decision ‘must’ be made only after due deliberation.
Think long and hard
Before applying for a loan, think long and hard as to why you need it and if it is in any way possible to do without acquiring it. Check for any alternative to borrowing from a commercial institution and or moneylender if a loan is necessary. This is because in the eventuality of anything going wrong the bank would be compelled to take legal action to recover its funds and that may include foreclosing on any mortgage or property that you might have put up as collateral. Therefore, before applying for a commercial loan, it would be advisable to ask your trusted friends or family members to ‘bail you out so to speak as a form of help. However, if such help is not forth coming then a bank loan may well be a viable option.
Paying off debts
Sometimes many of us inadvertently end up spending more than we earn and even before we realise it, we may end up incurring debts that we may not be in any position to pay off in our own individual capacity. Personal loans may be an immediate short-term fix for the problem and may well give us the required ‘breathing space’ so that we may be able to regain control of our finances.
As a general rule, these bank loans are called ‘instalment loans’, which means that they have to be paid back at certain fixed intervals. Typically, instalments for such loans are recovered courtesy month end cycles. However it is advisable to point out that such a loan is primarily based on ‘personal credit rating’ (and without any collateral) they are essentially unsecured debt, and therefore may potentially charge a higher interest rate against secured loans for capital expenditures such as home building or car loans. Nevertheless, these loans tend to charge lower interests than arguably the most common short-term loan facility, i.e. the credit card, so it may make sense to utilize such a loan to pay off your credit card bills. But it should be more of a ‘one time only’ case rather than a habit.
The ancient adage “Health is wealth” is as relevant today as it was in ages ago. Nothing in our lives is more important than our health unless of course it is those of our loved ones. Unfortunately, for most healthy people it is also the most undervalued as well as unappreciated part of our lives and it is only when we suffer the effects of ill health do we realize the importance of contingency plans for such unforeseen emergencies. Sometimes medical emergencies are like bolts from the blue because of which we may require large sums of money for many crucial treatments such as operations, and hospital stays. Rather than delaying urgent treatment and allowing the condition of the patient to steadily exacerbate, it is advisable to procure a bank loan and allow him or her be treated as soon as possible.
More often than not, a business requires investment and if you were well heeled, you would not require a loan per se. However, if you do not have the financial resources to set up your own business but still intend to do so then a bank loan might just give you the necessary leverage that would help you become a successful businessman.
By and large, it is better to opt for a secure business loan than a higher interest charging bank loan. However, if you do not have the required collateral but believe in your idea enough, than an unsecured loan may be what you would have to opt and hopefully it would help you climb the first steps on the ladder of success.
Once you have made up your mind that you have to procure a bank loan you must also keep inconsideration the fact that it is not the easiest of prepositions since all commercial banks are responsible for the money of the people who have given them their funds and that is why they do not hand over loans lightly. However, since their core raison d’etre (reason of existence) is charging interest so as to generate revenue for themselves, they would give loans provided the potential applicant successfully passes though the bank’s due diligence process.
Check and re-check your credit history
When applying for a bank loan the very first thing the erstwhile creditor will make a point of verifying, is your credit history. This is why it is vital that you have prior information of both your credit history as well as score in advance before applying for a loan from a prospective money landing institution. It is imperative that you confirm and subsequently re-confirm any faults or inadvertent mistakes. After identification of all anomalies, make sure they are rectified ASAP.
Credit scores have an inversely proportional relationship with interest rates and higher credit scores generally denote lower interest rates and vice versa. Sometimes if the interest rate is too high due to a low credit rating then the financial viability of the whole preposition may well be called into question.
Moreover, if your credit history is not up to the mark, refrain from applying for a loan since a refusal would further degrade your credit history.
You must know how much you need beforehand
An important consideration that you must address beforehand, is the total amount that you would require for your expansion plans. This is because the bank would closely monitor your expenditure of their money and would be greatly interested in knowing if you would be able to provide a healthy return on their investment.
Once you have figured out all the formalities as a final step log on to quiddicompare. The site provide its users with an up to date comparison of many all the well-known and trustworthy lenders right along with their rates. Visit the site today to find out the lender that is the most suitable for your specific needs.