Looking to get a personal loan to cover some expenses? That’s never a bad idea, provided that you know exactly what you’re getting yourself into. The loan market is quite dynamic, and the deals you see available today might look very different tomorrow. This makes it important to do regular research, so that you’ll know roughly where to look when the time comes to take out your loan.
There are several factors to keep in mind when scouting the market, and you should try to set aside as much time as you can for this if you want to maximize your chances. Of course, it’s not always possible to plan ahead for something like this, but if you can afford to take a more patient approach to it, it’s definitely worth it.
How Much Time Do You Have?
And that’s the first important point you’ll have to consider. The amount of time you have available – both for searching for a deal as well as for repaying the loan – is one of the most critical factors you’ll need to account for in your search. Try to talk to lenders as early as possible, so that you’ll have a set of deals readily available later on. This can improve your position in negotiations significantly.
Generally, taking a few days – or even a week – to do your research is a good idea if you want to get the best deals you have access to. If you have to take out a loan on very short notice – like on the same day or something close to that – you should be prepared to deal with uncomfortable conditions, such as high interest rates.
Improving Your Credit Score
If you have even longer to prepare, you should use that time to improve your credit score. This is not an easy process and can be very time-consuming on top of that. You should pull up your report and find out what your credit history looks like, and start working from the top down. That is, try to sort out the biggest issues on the list which can have the strongest potential impact on your credit score. You have limited time to get this done, so you should make the most of it.
It’s not rare to find errors on your credit report as well. This happens, and it’s a completely normal part of the process – so don’t be alarmed if you see anything unusual. Call up the corresponding company and/or the reporting agency, and get the issue sorted out. Remember that it can take some time before these fixes are reflected on your credit report, which might put you in a tricky spot if you need to get your hands on your loan before that.
Talk to the Lender
We mentioned negotiating above – and it’s something you should not ignore as an option in any case. Most lenders can be surprisingly open to discussing their terms with you, even if you’re in a less favourable condition at the moment – such as having a low credit score. As long as you have some reasonable arguments, and can show that you’ve done your research and are familiar with the market, that’s all that matters.
If you’ve recently done any work to fix your credit score, it might not be a bad idea to bring that up with the lenders in those negotiations. It will reflect positively on your profile, and might make you look like a more favourable candidate.
Work with the Same Lender
Lenders like security. That’s why people with bad credit scores get such bad conditions to begin with. A lender must make sure that they’ll be able to compensate for any people who default on their loans when working with less favourable borrowers. This also means that familiarity is something that can work in your favour, and you should do your best to take advantage of that. If you’ve borrowed money before, try to work with the same lenders again.
Since they already know you, they’ll know exactly who they’re dealing with, and will be more likely to give you better conditions without having to negotiate them over and over again. In fact, some lenders might even give you preferential treatment as a returning customer, although try not to get into that situation in the first place – unless you need those loans for a calculated reason, like investing into your business.
And if you want to build some rapport with a lender initially, you can take out a secured loan. As long as you’re confident in your ability to get it paid off, it can allow you to borrow at better conditions, and therefore repay the debt more easily and show that you’re a reliable borrower.