Thursday, February 25, 2021

Loans

Loans

How to Get Your First Loan

Posted: 25 Feb 2021 08:12 AM PST

Summary

  • Many people’s first loan is an auto loan, student loan, or even a credit card
  • You likely have never had to go into a bank and apply for a personal loan before now
  • You will need to have a certain amount of personal information to show the lender in order to secure a personal loan
  • Almost every part of your financial life will be used to assess your risk level when writing a personal loan

Are you wondering how to get your first loan? Maybe you have had a credit card or a student loan in the past, but now you want to apply for a personal loan.

Getting your first loan may seem like a daunting task, but it really isn’t that hard. You just need to keep the following things in mind:

  • Your credit score and history will be used to assess your risk.
  • Your potential lender may contact your employer and even past employers.
  • Lenders don’t want to take too much risk, so they will thoroughly vet you before giving you a loan.

If you’re new to loans and want to get a loan for any number of personal reasons, keep reading to see the information you will need to know how to get your first loan.

If you’re ready to apply for your first loan today, enter your ZIP code above to compare rates for your first loan.

What should I do to get my first loan?

There are a number of things you will want to do, but the first thing you should do, and the most important, is to check your credit score and spruce it up as best you can.

You can do this by paying down any debts you currently have, whether they be credit cards, car loans, or student loans. Paying down your debt and paying your debt on time will help increase your credit score.

Lenders like to see high credit scores. This means you pose less of a financial risk, and they will likely be able to get their money back from you.

The better your credit score is, the better interest rates you will qualify for. If your credit score is too low, you may not even be able to get a loan from most lenders.

Where should I go to get my first loan?

Applying at a bank is the way most people get their first loan, but you do not need to use a bank to get your first loan.

There are other lenders out there, including credit unions and private lenders, that may be able to offer you better interest rates and loan terms.

What you need to do after you check to make sure that your credit score is in order is to research lenders in your area.

You should see what each lender specializes in, how low they can go in terms of interest rates, and how likely they are to approve your loan application.

Doing preliminary research into the lenders in your area is the next most important step on your journey to get your first loan.

Will my employment affect my first loan?

Your current employment status will likely always be a factor in getting a loan, whether it is your first or your hundredth.

Lenders need to be able to verify how much money you make in any given month in order to assess your ability to pay back the loan you are asking for.

Your lender will likely contact your current employer to discuss your employment status and how long you have been with the company. They may even contact your former employers to make sure that the employment history and income that you are reporting is accurate.

Will my monthly debt payments affect my ability to get a loan?

Lenders will want to know what your current debt obligations are. They will get some of this information from your credit report, but they will likely need additional information like how much your rent or mortgage is.

Your monthly obligations are a big part of a lender’s equation. For example, let’s say you make three thousand dollars a month, but your financial obligations total 2,500 dollars a month. There is not a lot of expendable income in this equation to make debt payments on a new loan.

You need to be able to show potential lenders that you will have the ability to pay back any loan that you take out.

Be prepared to discuss and prove your monthly financial obligations with your potential lender in order to secure your first loan.

Will lenders consider my assets?

Lenders will consider your assets and liabilities as well when making a determination on your loan status. Your assets minus your liabilities equals your net worth, and this is a huge factor in determining your worthiness for a loan.

Assets include things that you own like properties, investment accounts, etc., while liabilities include student debt, mortgages, etc.

Lenders will look carefully at your net worth and make a final determination on your loan status from there.

Can I get a personal loan if I don’t have a credit score?

Most lenders will be hesitant to loan you money if you have no credit history or score. However, this doesn’t mean that you can’t get a loan. You will likely have higher interest rates as a result of your non-existent credit score.

If you’re interested in exploring this topic in more detail, Experian has a valuable resource for you to read through.

How to Get Your First Loan: The Bottom Line

You will need to be prepared with your personal, credit, and employment information. You can likely get better interest rates by shopping around and choosing a lender that caters to personal loans.

Doing your research and preparing for your loan application are the most important aspects of your first loan.

If you’re ready to get your first loan, enter your ZIP code below to compare interest rates on your first loan.

References:

The post How to Get Your First Loan first appeared on Loans.org.

Debt Settlement Negotiations: What to Know

Posted: 25 Feb 2021 08:10 AM PST

Summary

  • Debt settlement negotiations are often handled by third-party companies who promise to save you money and reduce your debt
  • Typically, after debt settlement negotiations, your debt is consolidated into one lump sum payment that is generally less than what you originally owed
  • While it sounds like a good deal, debt settlement can cost you more money in the long run and negatively affect your credit score

Debt settlement negotiations are aimed at reducing the amount of debt you owe by consolidating your debt into one lump sum. Generally, the lump sum is less than your original debt.

Debt settlement negotiations are often handled by third-party companies who work with your personal loan lenders to settle your debts.

Debt settlement negotiation services are most often used to handle credit card debts, but these services can be used to consolidate any debt.

Consumers should be careful when working with debt settlement negotiation companies. We understand how attractive the idea of consolidating your debt is, but in some cases, people may end up owing more money than they did before.

Plus, working with a debt settlement company could also have a negative impact on your credit score. This could keep you from getting a quality auto or home loan later on down the road.

Let’s explore debt settlement negotiations in more detail and see if these services are worth it for you. If you’re ready to compare debt settlement negotiation companies in your area, enter your ZIP code above.

How do debt settlement negotiations work?

A debt settlement company will negotiate on your behalf with your lenders. They will contact your lenders directly and work out terms for your debt relief.

In these cases, you may be advised to stop making payments to your creditors while negotiations are ongoing.

Generally, these companies try to negotiate for a lump-sum payment of your debt. You may be required to deposit money into a bank account administered by the company.

You will still have control over the money in this account, but it is set up as a way to save money while paying the lump-sum of your debt.

When your creditor and the debt settlement company reach an agreement, you must now agree to the new terms of the loan and make a payment of the debt.

Once this has all been cleared up, the debt settlement company begins charging you fees for their services.

Your lenders may not agree to debt consolidation. These third-party debt settlement negotiation companies cannot offer you a guarantee that they will be able to settle your debt.

If you’re struggling, you can read about other ways debtors recall their path out of financial peril.

What are the benefits of credit card settlement?

The main benefit of debt settlement is being debt-free. The mental stress of being in debt can have a negative impact on your life. The National Institute of Health conducted a study into the effect of debt on people’s mental health.

Debt settlement negotiations can help you avoid going bankrupt, keep the creditors from harassing you night and day, and even lower your total debt amount.

While all of this sounds amazing, you need to be careful. There are risks to working with debt settlement negotiation companies, and you should be aware of them before you choose to work with one of these companies.

What are the risks of working with a debt settlement negotiation company?

It is very likely that your lender will not agree to negotiate with a debt relief company. This could land you in hot water if you follow the debt relief company’s instructions and stop making payments on your debt.

If your lender refuses to negotiate, you could end up with late fees and higher interest rates on the debt that you stopped paying back.

Plus, even if your debt settlement negotiation is successful, the debt that is forgiven could be considered taxable income by the IRS.

You can be charged fees by debt settlement companies even if only a portion of your debts have been settled. These companies are allowed to start charging you fees after they have settled a debt and you make a payment to your creditor.

If you have debts with five different lenders and the company settles one of these debts, they can start charging you fees.

Finally, your credit score can be seriously damaged. When you stop making payments on your debt, this could hurt your credit score. If no settlement is ever reached, you end up owing more money in fees, and your credit score takes a big hit.

Why would anyone work with one of these companies?

Do you know how to negotiate credit card debt? Most people don’t, and it can be a daunting task to negotiate with your lenders, especially when you are in debt.

Debt settlement companies offer people hope, and they can be effective. However, you need to make sure that you do your research before you choose to work with one of these companies.

What kind of companies handle debt settlement negotiations?

There are many debt settlement negotiation companies out there. Companies like Merchants’ Credit Guide operate around the country offering debt relief services.

Before you choose to work with one of these companies, do your research and speak with a financial advisor to see if this is a good idea for your debt situation.

Debt Settlement Negotiations: The Bottom Line

Debt settlement could be a major lifeline to you and your family, but it is important to understand what you are getting involved in before you make a commitment that could negatively affect your credit score and fail to increase your debt.

While you can succeed at lowering your debt, there is no guarantee that debt settlement negotiation companies will be able to consolidate or lower your debt obligations.

If you’re ready to lower your credit card debt, enter your ZIP code below to compare debt settlement negotiation companies in your area.

References:

The post Debt Settlement Negotiations: What to Know first appeared on Loans.org.

How to Negotiate a Business Loan

Posted: 25 Feb 2021 08:09 AM PST

Summary

  • Negotiating favorable terms for your business loan could really help your business grow and thrive
  • It is important to keep in mind that only certain facets of a business loan will be negotiable; educate yourself beforehand on what parts are negotiable and which aren’t
  • Preparation goes a long way; take the time to get to know your lender, the terms lenders use, and exactly what you need for your best chance at successful business loan negotiations

If you want to learn how to negotiate a business loan, you need to take the time to prepare yourself. A business loan could be the difference your business needs to take off and grow.

However, if you don’t prepare and you’re not ready for negotiation, you might not get a business loan, or you may get a loan with unfavorable terms.

The important things that you need to know are what facets of a business loan are negotiable and the ways you can improve your chances in a business loan negotiation. We’ll explore these topics below.

If you’re ready to compare business loan interest rates in your area, enter your ZIP code above to start getting business loan quotes today.

How can I negotiate a business loan?

You may have heard business loan horror stories from peers, friends, or family members. If you do not prepare yourself for negotiation or understand what you need financially, you could end up regretting the business loan that you sign.

If you really want to negotiate the best possible business loan, you need to take the time to prepare. We’ll go over what you should know and how you can use it to your advantage while negotiating a business loan.

This is less about how to negotiate or to offer tips for negotiation and more about informing you about what you can and can’t do.

Along the way, you can use these insights and turn them into tips for negotiating so that you can get the best possible business loan.

If you’re interested in more business loan information, you check out Nolo’s free resources on the subject as well.

How should I prepare for business loan negotiations?

In all honesty, preparation is the most important step in negotiating a favorable business loan. Too many people do not take the time to prepare themselves, and as a result, they find themselves with less than favorable business loan terms.

How should you prepare to negotiate a business loan?

First, you need to research lending institutions. Lenders will do a lot of research on you when you apply for a business loan.

You need to take the time to understand them as well. Some lenders will cater themselves more to what your needs are than others. You need to know this.

You don’t want to go into a bank or credit union and waste your time by applying for a loan that they will not approve. Depending on your business, how much money you want to borrow, the best lender for you will vary. Do your research and keep your options open.

Second, it is good to familiarize yourself with the terminology that lenders will use.

It can sometimes seem like they are speaking another language, but if you take the time to understand the terms being used, you will be able to hold a fluent conversation and help negotiate better terms.

Finally, you need to prepare your financial statements for both your business and personal accounts. Make sure your proposal is neatly typed and error-free.

Show the lender that you know exactly how much money you need to borrow, what it will be used for, how it will help you earn more money, and how you plan to pay back your loan.

People with clear, concise plans have an easier time getting good business loans because they were prepared, they understood what they needed, and they worked with the right lender.

What facets of a business loan are negotiable?

If you want to be successful in your business loan negotiation, you need to know what facets of a business loan are negotiable. Here are the key features of your business loan that you will be able to negotiate:

  • interest rate
  • prepayment and repayment terms
  • personal guarantees

We’ll take a look at what you should keep in mind while negotiating each of these facets.

How can I negotiate a lower interest rate on my business loan?

Once again, preparation is key. Understand the lender you are negotiating with. Research the lender and how low they are able to go in terms of the interest rate.

Use this information combined with your credit score and borrower profile to push for an interest close to the lowest rates the lender offers. If you don’t prepare and do research, you won’t know how low your lender can go.

What should I keep in mind with business loan prepayment and repayment terms?

Did you know some lenders assess a fee or penalty for paying off debt early? Speak with your lender and see if you can get them to waive this fee. It can help you pay off your loan in a timelier fashion.

The repayment terms of your loan are probably the most important aspect of your loan. Repayment terms are where a lot of people get in trouble with their business loans.

Make sure you understand the terms of your repayment and make sure there are no sticky points that could cost you money or pose difficulties for you down the road.

Should I give a personal guarantee on a business loan?

If you can avoid giving a personal guarantee on your business loan, do so. Personal guarantees allow lenders to go after your personal assets or finances should your business fail to pay off its loan.

It is best to keep your business and personal finances and assets separate.

You may have no choice but to give a personal guarantee. If you have no choice, make sure your personal guarantee is very limited to decrease your risk exposure.

If you’re ready to apply for a business loan, enter your ZIP code below to compare business loan rates in your area.

References:

The post How to Negotiate a Business Loan first appeared on Loans.org.

How to Negotiate an Auto Loan

Posted: 25 Feb 2021 08:08 AM PST

Summary

  • You can negotiate the sale price of a vehicle with a dealership or a private seller, but you can negotiate the terms of your auto loan as well
  • While there are limitations to how much you can negotiate an auto loan, there is some wiggle room for you to work with
  • Successfully negotiating a more beneficial auto loan will take preparation

Can you negotiate an auto loan with your lending institution?

The answer is yes. You have the ability to negotiate your auto loan just like you would any other transaction.

However, if you want to successfully negotiate better terms for your auto loan, you will have to be prepared. You’ll need to have a comprehensive understanding of your finances and financial standing.

You’ll also need to know how much you can afford, how much the vehicle you want to purchase costs, and how long it will likely take you to pay the loan back.

When you have a comprehensive understanding of all of this information, you are ready to begin shopping around for an auto loan.

If you’re ready to learn how to negotiate better terms for your auto loan, keep reading below. Enter your ZIP code above to compare rates on auto loans in your area.

How can I negotiate a better auto loan?

The first step in how to negotiate an auto loan is getting your finances in order. If you want to get the most affordable auto loan interest rates, you will need to improve your credit score first.

Lenders are wary of people with bad credit scores and will charge them higher interest rates. Keeping this in mind, you might want to focus on improving your credit score before you look to purchase a new vehicle.

If you’re interested in learning more about how you can improve your credit score, Experian has helpful resources that you can peruse. The stronger your credit score is, the more negotiating power you will have with auto lenders.

Should I go with the auto lender that the dealership works with?

Dealerships have finance departments that work with lenders to get you auto loans. Here is the truth. Dealerships are not required legally to offer you the best auto loan interest rate that you qualify for.

In fact, many times, dealerships will get paid an incentive for helping arrange the financing between you and the lender and this will be charged to your financing package. Is there any way for consumers to get around this?

You can work with lenders on your own. You are not obligated to use the dealership’s financing department. You can shop around with multiple lenders and find the best rates that you apply for.

Shopping around for auto loan quotes will also give you the ability to negotiate your interest rate directly with the lender. Some lenders may even offer to beat rates offered by the competition.

It pays to shop around and educate yourself on the auto loan interest rates that you qualify for.

Can I lower my auto loan interest rates by making a bigger down payment?

If you make a bigger down payment, you will have to borrow less money from a lender. The less money you borrow, the less risk you pose to the lender. This means you can get lower interest rates.

The higher the risk you pose, the higher your interest rates will be in turn. By making a larger down payment on your vehicle purchase, you can lower your auto loan rates.

This is why it is important to know your finances and understand how much you can afford to pay.

If you can make a big down payment, it is in your best interests to do so, and it will help you negotiate a lower interest rate on your auto loan.

Will negotiating a better price on my vehicle purchase affect my auto loan interest rate?

If you can negotiate a better price for your purchase from the dealership’s sales team, you will need to borrow less money to pay for your new vehicle.

Much in the same way that making a larger down payment reduces your risk, reducing the price of the vehicle you want to buy also reduces your total risk.

This means you can get a more competitive auto loan interest rate because you pose less of a risk to a lender. Any way you can reduce your total risk gives you negotiating power when working with an auto lender.

Will choosing a shorter repayment term affect my auto loan interest rates?

Yes, lenders will typically offer lower interest rates on loans with shorter terms.

Why is this? Well, you guessed it, there is less risk of a person defaulting on a short term loan than there is on a long term auto loan.

Opting to go with a shorter repayment term can help you lower your auto loan interest rates, but keep in mind that this will also increase the amount of each monthly payment too.

Will a cosigner help me get a better interest rate?

You can negotiate a better auto loan interest rate if you also have another person with a good credit score co-sign your loan. This mitigates the risk the lending company is taking, and it gives you more negotiating power when it comes to the rate of interest on your auto loan.

Cosigners should keep in mind that they will be responsible for your debt if you are unable to make your auto loan payments.

They should also be aware that this debt will appear on their credit report as well, and if there are any issues with timely payments, it will also affect their credit score.

How to Negotiate an Auto Loan: The Bottom Line

Getting the lowest auto loan interest rates requires you to lower the amount of risk you pose to lenders.

The best way to negotiate an auto loan is to be in a position of good credit and healthy finances. Take your time to understand your credit, finances, and the type of loan you need before going to the dealership.

If you’re ready to negotiate an auto loan, enter your ZIP code below to compare auto loan interest rates in your area.

References:

The post How to Negotiate an Auto Loan first appeared on Loans.org.
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