Being a student or when starting your first job, you will most probably face financial challenges. As such, to meet your financial needs, you will have to know how to take a loan. You will also want a loan that is the most appropriate for you and at the best interest rate.
Here are things that you should consider when taking a first loan.
There are several options that you should consider when taking a first loan.
A loan whose interest rate is the lowest is the most ideal for a student. Such a loan is repayable immediately you start working.
There are different lenders who offer personal loans to borrowers. Nevertheless, before picking a personal loan, consider the monthly repayments that you will be required to make, what you can afford and the exact amount that you really want to borrow. It is important to avoid overstretching your finances.
For instance, you may take a loan to fund a college course or to buy a first car. When you take such a loan from your bank, the bank will require you to pay the amount that you borrow and the accumulated interest from the capital amount. Failure to stick to that repayment plan will compel the bank to charge you more. Therefore, take a loan when certain that you can afford its cost. Always remember that a loan with higher interest will take you longer to repay and this will cost you more.
Loans to consider when your credit rating is poor
Having no credit and having a poor credit are different things. However, they both make getting lowest interest rates’ loans tricky. If you do not have a credit history since you have never taken a loan, you are likely to struggle to get a good loan. However, if your credit rating is poor, it means you might have a record of missed repayments or you have been declared bankrupt or faced a judgment of the county court.
Nevertheless, none of these situations implies that you will automatically be locked out by lenders. It simply implies that you have limited options. You may also face higher interest rates or access smaller loans. Borrowers whose credit histories are sparkling and ones whose history shows that they make reliable payments are entitled to better deals.
Nevertheless, some lenders give people that they consider as greater risk borrowers bad credit financing due to their bad credit history. However, these loans have lower limits and higher rates.
Improving credit rating for young people
You can improve your credit rating in simple ways. For instance, ensuring that your name features in the local authority’s electoral roll is very important. If your name does not appear in this roll, you might not get credit.
Additionally, space out credit applications because each will create marks in your file. If you happen to be rejected by a lender, the next lender is also likely to reject you. If you are not given credit, ensure that you maintain your repayments plan so that you can rebuild your credit history gradually.
Never despair and always bear in mind that when deciding to lend money, lenders do not consider credit history only. For instance, they also consider your job and salary as well as other assets that you might possess.