In recent years, banks have become more and more cautious when it comes to providing long-term loans. This is, in part, down to changes in financial regulations after the most recent financial crisis. Without putting a bit of work in before you head to the bank, you may encounter a substantial amount of difficulty throughout the application process. You may even be declined, even if you are able to afford the loan. On this page, we are going to discuss a few tips for getting a long term loan. If you follow these tips, you will be in a far better position when it comes to talking to the lender. In fact, you may even be able to score yourself a far better interest rate.
Know what you are applying for
Any loan which has a repayment period of one year or over can be defined as a long-term loan. There are a number of different types of long-term loan out there. It is important that you choose one which suits your own personal situation. This means that you will need to understand the various types of loan that are on offer. For example; there are both secured and unsecured loans, with the former required when it comes to the borrowing of substantial amounts of cash e.g. if you opt for a mortgage. Unsecured loans tend to be for smaller amounts, although if you have a poor credit history (we will discuss that soon), you may be asked to put up some sort of collateral. This really will depend on the amount of money that you are looking to borrow.
Whilst knowing what you are applying for will not necessarily save you all that much in the way of cash, it is still worth researching. The better you understand the loan market, the better position you will be in when it comes to selecting the perfect loan product. For example, if you are looking to borrow cash for education, you may be able to obtain a dedicated student loan.
Check your credit history
If you have a poor credit history, you are going to find it very difficult to get hold of the cash that you need. In fact, you are going to find it almost impossible (as mentioned before, banks are very reluctant to hand out money nowadays). Before you apply for a loan, it is suggested that you take a look at your credit score. There are plenty of companies online which offer this service. If you are in America, you are looking for a high credit score. The higher it is, the better interest rates you will be able to score. If your credit rating is below 700, you may wish to look for ways in which you can boost that score.
As you browse through your credit report, you may spot errors. For example, if you have made a payment and it has not been updated in the report (you will be surprised at how lazy some companies out there are!). This could bring down your credit score substantially. in order to rectify this, you are going to need to pick up the telephone and get in touch with the company in question. They will be able to put it right for you. If it has not updated in a week or so, then get back in touch with them.
If you have a large number of missed payments in recent months, then do not get in touch with a lender yet. You should have made every single payment on time for the past six months. If you haven’t, then your chances of being approved for a long-term loan are close to zero.
Finally, if you have any balance due on your credit card, try to pay back as much as you can afford. The more credit you have available, the more chance that you will be accepted for a loan.
Remember, if that score is below 700, the chances of you being accepted by a major bank are close to zero. If you do get accepted, then you are hardly going to get the most favorable of interest rates. You may be able to save a substantial amount of cash in the long run by working on your credit score before you apply.
Consider working with a broker
If you are looking to borrow huge sums of cash over a substantial period of time, for example, a mortgage, then you may wish to talk to a broker. The job of the broker is to ‘negotiate’ on your behalf. Due to the close connections that they have to lenders and their top quality negotiation skills, there is a pretty decent chance that they will be able to net you far more favorable rates than if you went to the lender directly.
Consider your income
Before you apply for your loan, make a list of all your income and expenses for each month. Make sure you consider each and every source here. Try to be as accurate as possible, and bring that document to the lender. By plotting out your income and expenses, you will be able to see how much you will be able to afford to pay back on a loan each month. In addition to this, the bank is going to have a useful piece of information to look at when they are deciding whether to offer you the loan or not. Many people who have prepared a list of income and expenses and taken it to their bank have, quite often, found that the bank is willing to let a slightly poor credit score slide since the borrower has demonstrated that they can easily afford the loan.
Apply as early as possible
Many banks may promise loan money being delivered within a couple of days of application, but rarely does it pan out like this. One of the best tips for getting a long term loan that I can offer on this page is to apply as early as possible. Try to apply a couple of weeks before you need the cash. This will give you time to shop around and, if there are any issues with the loan application process, enable you to rectify them in time. The last thing you want is for the process to be delayed for weeks when you need the money within a couple of days, right?
Finally, make sure that you research the loan before you head to the lender. There are plenty of resources online that you are able to tap into. Researching will enable you to see various interest rates, as well as the amount of cash you can expect to pay back each month. The information will not be completely accurate as the actual rate will be dependent on your own personal circumstances. They will provide you with a decent guide, though. This will enable you to determine which vendors to avoid and which ones may be worth researching a little bit more.