Every time you face a financial crisis, a quick thought about taking a personal loan probably crosses your mind. But lack of knowledge about personal loans and indecision hold you back. If, you have developed a good credit history over the years, getting a personal loan approved will not be a major issue for you. But even if you have a poor credit rating, one which you are not particularly proud of, you can still get a loan, provided you are sincere and you can prove to the loan approving agency the valid reasons for default in the past and how you plan to change it in future.
Why go for a personal loan?
A personal loan is an easy way to get money for a sudden financial exigency which you had not foreseen or you may have but don’t have the personal resources to deal with it at present. So, you apply for a loan which gives you the money to meet your immediate problem in exchange for an interest that you will have to pay along with the principal amount. Usually, the rate of interest is lower in a personal loan. Cashco Financial (www.cashcofinancial.com) has a personal loan product called a Flex Loan that has a wide array of benefits associated with it including getting the money you need at a lower interest rate, and rebuilding your credit score.
What are the factors that you should take into account before applying for a personal loan?
Before applying for a loan from a financial institute, you will have to make some quick back-of-the-envelope calculations to get a few things in perspective. They are as follows:
Credit score: Many online credit rating calculators are available today. Upload the relevant information and they would give you your credit rating. You can also find out through some extensive research what the score means in the context of Canada and what your best options are for that particular score.
Type of loan: Depending on your need, you will have to consider the kind of loan that you should apply for. Should you choose secured loan or unsecured loan? Should it be fixed or variable? Do you need a line of credit? The answer would lie in the nature of your financial need. Secured loans usually have the lowest rate of interest and are usually taken for financing an asset. There is a risk with variable rates of interest that you may have to pay more. Fixed loans don’t have such a risk. A line of credit is usually available to big businessmen with a certain standing and those without blemishes of loan default. They have a minimum and maximum limit on the amount that you can draw. The advantage is that you will have to pay interest only for the money that you have used even though more money may have been allocated.
Decide on the amount:Use discretion when deciding on the loan amount. Borrow only what you require. Don’t borrow more even if you are qualified to. Also, decide on the EMI carefully. If you have the option of going for a higher EMI, take it because you would save quite a bit of money on interest payments.
You will have to do an internet research to find out about the following
Origination fee: Some lenders would charge an origination fee to process the personal loan application. The amount could vary between 2-3% of the loan amount and is usually deducted from the loan amount itself. The remaining is credited to your account.
Prepayment: You need to find out before choosing a personal loan whether it has a clause under which the lender can levy a penalty for wanting to pay off the loan before the full tenure. If yes, then what is the amount? Compare online between a few personal loans before taking the final decision.
Other terms and conditions:Read the loan documents carefully. There could be some hidden clauses and conditions which the suave salesman may deliberately conceal. You may be dragged to court later for failing to stick to one of these. So, be careful.
There are a number of long term personal loans that you can consider. But, the Flex Loans from Cashco Financial get approved easily. There will be minimal credit checks and the entire process is quick. If you are looking for a short term loan, you can also look at the Payday Loans from Cashco.