How to Take Out a Loan

The recent economic recession has put the brakes on easy credit, cheap loans and a culture based on financial risk-taking. With banks more reticent about lending to customers, finding a loan or finance has become more challenging. So if you are thinking about taking out a loan, what do you need to consider?

A long-term commitment
Stability is finally starting to return to the financial markets. Banks, now less fearful of collapse and thanks to a large injection of cash into the economy from the government, are now starting to think about lending once again, but this time the lessons have been learned from the previous decades’ exuberance and loans are far more tightly regulated. This doesn’t mean that they’re harder to find; just that lenders are being a little more cautious about how much they lend and whom they lend it to. But people still need to borrow money, whether that’s for a home improvement, a new car or a broken down washing machine. However, obtaining a loan is a long-term commitment and it’s worthwhile thinking not just about your immediate situation, but your prospects for the future as well. So before you sign on the dotted line, there are a few things to look at.

Be honest with yourself – taking out a loan means that your financial history will be scrutinised carefully. If you are struggling to make mortgage payments or cope with daily living expenses already, you may find that taking out a loan compounds the situation. It may help in the short term, but loans are typically not short-term options and you may find yourself in financial difficulties later on. By analysing your current cash flow, you will be able to determine if a loan is a practical option both now and over the coming months. If you do choose to take out a loan, a personal ‘financial audit’ will help you to decide whether you will be able to meet the monthly repayments comfortably without placing additional strain on your finances. It could also give you an idea as to where your money is going and how you could make savings by doing simple things like switching your utilities or insurance providers.

Never borrow more than you have to. The temptation is to add a ‘little bit extra’ on top, just in case. But this will give you a larger commitment, larger monthly repayments and higher interest charges as well. Remember that you are not just borrowing a set amount – the level of APR (Annual Percentage Rate) will increase how much you have pay back to the lender. The best way to minimise this is to use a comparison site to help you find lenders with the lowest APR charges (and also any other extra charges that taking out a loan may incur).

Crunching the numbers
Another thing to look at is what is becoming known as the TAR or total amount repayable. Fixed rate loans may appear to be cheaper initially, but once the fixed rate period ends you may find that the cost of your loan increases as the interest rate becomes variable. Make sure that you read the small print, as there may be hidden charges such as a penalty for early repayment or extra costs for any correspondence the loan provider may send to you. All of these extras can add up so you need to do your homework before you start. If in doubt, talk to a financial advisor who will be able to sit down with you and work out exactly how much you can afford to borrow.

Taking out a loan represents an ongoing financial commitment, and if you default on repayments it could affect your credit history. Late payments or defaults can damage your credit rating, making it difficult for you to apply for credit or loans at a later date, so the key is to ensure that you are not overstretching yourself. If you are unsure as to whether your credit rating will enable you to take out a loan, a good plan is to check your credit rating first with one of the companies that provide information on your credit history. If you have a good credit rating, you will find it easier to be accepted for a loan.

Lenient FHA Loan Guidelines Make Now a Great Time to Apply

FHA loans are a great option for first time homebuyers on the house hunt, as well as current homeowners who are looking to refinance their current mortgages. These loans offer low down payments, as well as low interest rates, which helps keep monthly mortgage payments low. This type of financing, which is insured by the Federal Housing Administration (FHA), also has more lenient credit and income qualifications than most other home loans. Even potential borrowers who have less-than-average credit scores may still be able to qualify.

Loan Eligibility

It is typically easier to qualify for this type of financing, compared with other types of home loans. While the FHA does have lenient credit score and income requirements, most lenders require that applicants have a credit score of at least 620 to qualify. The FHA also requires that applicants have a clean credit history of at least twelve months, meaning they have had no delinquent mortgage payments during the twelve months preceding their application. The house an applicant wants to finance must be his or her primary residence, which means they plan to live there at least six months out of the year.

Loan Requirements

This type of financing requires that the borrower make a down payment on the home being purchased, as well as monthly mortgage payments. The down payment can be as low as 3.5%, which is much lower than down payments on most other home loans. Applicants will also have to pay an upfront mortgage insurance premium on the loan, which is currently equal to 1.75% of the loan amount.

Before the loan can be closed, an appraisal will need to be done on the home to ensure that the home meets all of the minimum safety standards that the FHA requires and to document the value of the property. Borrowers also will be required to escrow their homeowner’s insurance and property taxes, which ensures that everything is paid up to at least one year.

There is interest on the loan, but it is typically lower than conventional loan rates. And borrowers can opt for fixed interest rates so that their rates remain unchanged over the life of their loans and their monthly mortgage payments are consistent. This option would be especially good for borrowers who have had credit issues in the past.

Loan Refinance

For a current homeowner, refinancing with an FHA loan could lower his or her interest rate, which could also lower the monthly mortgage payment. Refinancing also gives homeowners the option of changing the terms of their loans. They can extend the length of their loans or change from adjustable rates to fixed rates, which could save them thousands of dollars in the long run. With the cash-back refinancing option, homeowners can take out a loan for a higher amount than the amount needed to pay off their current mortgage and use the rest to pay off large bills or cover other expenses. There are no restrictions on how a homeowner can use the cash.

Apply Now Before Requirements Change!

This type of financing offers several benefits and has relaxed guidelines. A borrower who does not have a lot of money for a large down payment can still become a homeowner with this type of loan. Current homeowners can save money every month by refinancing and getting lower interest rates, as well as receive cash back for other financial needs.

The FHA will be changing their requirements in the next few months, so now is a good time to speak with a FHA loan specialist to determine whether this type of financing is right for you!

Personal Loans – A Necessary Evil

Nobody ever wants to take a loan – after all they are a symbol of the fact that you need extra money or that your present finances are not sufficient to cover your needs and requirements. However loans have become an obligatory evil in our lives. There are many a time when circumstances compel us to look beyond our own resources and when we turn to finance companies to fund us.

Most premium finance companies in the United Kingdom will offer you a loan at fairly reasonable rates. The basic processes remain the same for all of them. They check your credit rating, you check the rate of interest they are charging and the repayment time period. You also determine the amount that you can comfortably take on loan, and which you will be able to repay with certainty. It is only after you have done this basic ground work, you should begin your search for a loan from a finance company.

Black Horse Finance, like most other loan companies permits you to borrow between 1 to 5 years. They do not expect any repayments for the first 45 days and they let you take a break once a year, every year from the repayment schedule. The APR’s are determined by the loan amount, the period of repayment and also other options such as those mentioned above.

Sainsbury Finance also offers the same services and facilities, and they offer extra discounts and rates for their Nectar Card holders. Applying online and getting an instant loan decision is one of the biggest advantages that modern technology has provided in the finance field. If the loan is sanctioned, the cheque is delivered within 24 hours, so that you can instantaneously solve your problems.

GE Money is another financial company that runs the gamut of financial services. Along with insurance and mortgages, they also give personal loans and loans for buying a house. The rates are highly competitive and so their customer service is also of a very high standard.

No matter which finance company you choose, whether it is Sainsbury or Alliance and Leicester, or any other company such as Blemain finance, there are few facts that must be kept in mind, prior to applying for a loan and during the loan reimbursement period.

Before you apply for a loan, be absolutely certain as to the maximum loan you really need. Do not go overboard in your amount. Every loan has to be paid back, with interest. Even if your monetary circumstances become more difficult, the loan still has to be repaid. So calculate your monthly payments amount vigilantly and take all other unforeseen situations into consideration when making this calculation.

Check out the rates and conditions from a lot of finance companies. There are many websites where you can enter your requisite details and they will look at all the options available among all the companies and find you a loan which is just right for you. They do all the hard work for you and make sure that you get the best possible deal.