Reasons For Rejecting Loan Applicants
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If you are looking to borrow money, for whatever you choose - whether it is for debt consolidation or to buy a new car, or maybe even to pay for sending your child to university - there are some important things that you should check before you commit yourself.
The key consideration is being able to afford it. While looking at the numbers a monthly instalment may seem achievable, you need to evaluate all your financial obligations practically. Make a monthly budget - consider everything from your savings to your mortgage to insurance for your home and car, other borrowing or responsibilities you have, plus food and entertainment expenses - and try to be realistic! For instance, if you normally spend £200 per month on your food and leisure activities, do not budget £100, hoping that you are able to get by with less money - you won't!
If you have some money left after all this, then this really should be the maximum amount that is within your means to spend on your monthly loan repayment.
When you've checked that you can afford the expense of the loan, you need to examine the small print.
For example, many loan providers have a clause in the agreement between you and them that entitles them to charge you a financial penalty in the event you settle the loan prematurely. This is known as ?early redemption?. The size of the penalty will differ from loan provider to loan provider, however, you can generally expect to pay an amount equal to two months of interest in addition to the amount for paying off the loan.
Furthermore, take a look at what the consequences are if you make a late monthly loan payment - the majority of loan providers will charge a fee, so it is important that you are aware of the exact amount that you are responsible for.
Shopping around puts you in a good position to find the most favourable loan available. There is a large number of different loan packages out there - some even have payment breaks where you can skip a monthly instalment - so make sure you don't just grab the first package that comes along.
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