7 Things To Know Before Applying For An Online Loan

December 28, 2020

With many of us struggling to make ends meet at every point in the month, several risks can come from applying for loans online. However, taking the necessary precautions will mean that you are able to apply for a loan online as safely as possible for the funds that you need. 

Look Into The Current State Of Your Credit Score

When looking to apply for alternative finance to help you out of a financial emergency, you must look into the current state of your credit score. By addressing whether or not you have a strong line of credit before applying, you can determine whether or not you are likely to be accepted for your loan type. If you do have a poor credit score it is advised that you work on strengthening this before applying for your chosen loan type. 

Determine What Loan Type You Need 

When you have looked into your credit score, it is then time to determine which loan type you need. When faced with an unexpected financial emergency, many opt for a quick loan from short term loans bad credit lenders as this can provide them with a loan quickly that can be paid back by the next payday. However, there Are several other loan types such as guarantor loans that can be used if your credit score is too poor for you to be accepted. 

Work Out How Much You Can Afford To Pay Per Month 

The next step is to look at the amount you can afford to pay back per month. With many lenders providing an outline into the APR and the way that the loan term can affect the amount you pay back, this will give you a good indication beforehand to ensure that you can afford these different loan types before application. 

Look For Reliable And Trustworthy Lenders

Finding reliable and trustworthy lenders can seem like an impossible task when faced with a financial emergency as you are often rushed off of your feet trying to find financial aid as quickly as possible. However, using the FCA register can aid you in finding an FCA approved lender that you can trust to help you gain access to the emergency funds that you need. 

Understanding The Difference Between Inquiries During The Application Stage 

When applying for your chosen loan type, you are met with two different kinds of inquiry. One can be seen on your credit score and the other is used to allow customers to monitor their own credit score. To help you understand the difference, we have given you a small breakdown below. 

Soft Inquiry – This is an inquiry that allows you to check your own credit score without harming your credit score. This also takes place during the preliminary application process to give you an answer as quickly as possible. 

Hard Inquiry – This is an Inquiry that takes place when you finalise the loan type that you want. This is an inquiry that is completed by the lender themselves and allows them to look into whether or not you have applied for any other loans in the past. These style of inquires will appear on your credit score for up to 2 years and can be seen by credit reporting companies as well as other lenders and banks. 

Consider The Loan APR 

The loan APR can also have a significant impact on the amount that you will be paid back per month. Therefore, it is important to make sure that you have everything that you need beforehand to make sure that you are able to meet every repayment on time throughout the loan term. 

Consider Your Monthly Line Of Income 

The final element that you should consider before applying for this loan is to consider the monthly income that you have. This will be checked by your chosen lender and could be a deciding factor on whether or not you are accepted for your chosen loan type. 

With this in mind, there are several elements that you need to consider before applying for a loan online to ensure that you can meet every monthly repayment and limit the impact on your credit score. 

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