Before Applying for a Loan, Five Tips to Note!
Nowadays, applying for a loan is very simple, as simple as just two taps on the mobile phone, or through the phone. Nevertheless, before applying for a loan, there are still a few points that must be considered again, otherwise simple things in minutes will be complicated and even affect the approval result!
1. Assess your repayment ability
If there is a loan, of course there will be a repayment, so it is very important to understand your ability to repay. Before borrowing, you can make a income and expenditure calculation table, detailing your monthly income and expenditure, to see if you really have a loan need, and the amount of loan you need; you can also make good use of the "every Monthly repayment calculator" to understand the amount of repayment you can afford. If you find that you are struggling to repay after borrowing, and you have to delay repayment, you may have to penalize interest and pay late repayment fees, which will affect your credit rating. However, borrowing is not the same as borrowing. After all, borrowing has a cost. It is unnecessary to borrow more than necessary and increase interest expenses.
2. Compare "APR"
As the saying goes, there is no free lunch in the world. When choosing a loan, you must be very careful when you see "$0 interest" or a super high rebate, so as not to lose too much. In addition to interest, loans may also have other expenses, such as handling fees and annual fees, or other hidden terms or charges. Therefore, when calculating borrowing costs, interest and all other related expenses must be considered together. At this time, you can compare the "Annualized Percentage Rate" (also known as "APR") of different loan plans-a reference annual interest rate converted from loan interest plus various fees. According to the guidelines of the Hong Kong Association of Banks, all banks must use the same formula to calculate APR. Therefore, the actual borrowing cost can be known by comparing the level of APR. It is simple and straightforward.
3. Interest discount
Every tax season, you may hear that even friends who borrow less often will be eager to move, all attracted by low interest rates. But in fact, banks will also offer various discounts from time to time, such as additional rebates, interest discounts, or waivers of handling fees through online applications. The discount level does not lose the tax season loan at any time. Therefore, when choosing a loan, you should shop around first, seize the opportunity and save more at any time.
4. Credit rating impact
It is now popular in all walks of life to provide customers with personalized services, and in the world of loans, there are also "personalized interest rates." Do you know that a lot of times the bank actually judges the interest rate that can be granted to you based on your credit score? When approving loan applications, banks will refer to the personal credit scores in the Union Credit Report. The scores will directly affect the approval results, loan amount and interest rate. Therefore, it is best to cultivate good financial management habits to improve credit scores, such as:
• Repayment on time
• Avoid excessive use of credit and maintain a low balance
• Check credit reports regularly and correct incorrect information
5. Prepare the documents
Before applying, prepare proof documents such as income and residential address, which can be submitted immediately when the bank requests it. This is definitely helpful for speeding up the approval process; and by submitting the latest income proof to update the bank records, there is a better chance Speed up other credit applications in the future. Some banks on the market do not need any supporting documents from long-term customers. You can check with the bank before applying for a loan.
