Lending money and loans: 5 things to consider when choosing a lender
If you are thinking about taking a loan, you are not alone. Millions of individuals and businesses all over the world take financial help at some point or the other. Whether it is a personal loan, or a housing loan, or even a business loan, there are always takers.
With so many different banks, financial institutions, and private lenders in the industry, selection can become a bit overwhelming. Questions like the following keep cropping up in our head-
- How can I select the best lender?
- What are the terms and conditions I should sign on?
- Will I be able to repay the loan or not?
- What happens if I fail to repay it?
In this article, we are going to help individuals that are looking to get a loan. Specifically, we are going to point out 5 important things you need to take into consideration when choosing a lender.
List of 5 important things to consider when choosing a lender
1. Reputation and Credibility in the Industry-
You do not want to go to the shop down the road and take a loan. Trust me, that is the worst decision to take. In contrast, you want to opt for a lender that is formal, organized, and has been in the industry for some time. This experience will benefit you when it comes to doing paperwork, negotiating lending rates, and disbursal of the loan amount.
2. The Terms and Conditions of the Loan-
In some instances, we need money on an emergency basis. This makes us agree to the terms and conditions of anyone who agrees to lend us the money at a moment’s notice. This is not a good strategy as you would come under a lot of pressure when carrying out the terms and conditions. Make sure to check the terms and conditions and then sign on the dotted line.
3. The Rate of Interest that is being charged-
At no point, you want to return more money after the loan period than you had originally borrowed. This means that you need to keep a close eye on the interest rates. Compare as many institutions as possible and see what they are charging in terms of the interest rates. This will give you a fair idea of whether the lender is being fair or taking advantage of your situation.
4. Flexible payment schedules-
There might be situations where you are being unable to pay the monthly EMI because of some problem. In such a case, the lender should be flexible to understand the issue at hand and give you the necessary relief. You might be looking to pay a lump sum amount in the middle of the loan period to reduce the EMI. Ensure that this kind of flexibility exists in the payment schedule.
5. Professional staff and great response times-
As someone who is taking out a loan, there will be so many instances where you will have to talk to the lender. It is important that the support team is professional enough to address all your queries promptly. Overbilling in terms of interest, the addition of new regulations, etc, are instances where you will have to seek clarification from the lender.
The bottom line
According to UK Credit (S) Pte Ltd, a leading financial lender, it is important to pay attention to the documentation process. The best institutions will have a ton of processes that you would need to satisfy. The interest rates will be low, but all other regulations and paperwork satisfaction would have to be maintained.
Informal lenders that compromise on the paperwork and documentation are the ones that are going to charge high-interest rates. They are the ones that use strong-arm tactics like collection agents to force you to pay back the loan. You must try your best to stay away from them.
If you have any questions on this issue or any other financial topic, write to us in the comments section below. We will try to address them to the best of our abilities.
