Before signing any paperwork, or getting too far into the loan process, ask questions! Here, we will discuss a general list of things to ask your loan company to make the process run smoother, and so you can stay informed.
- Ask the lender what you will need to bring with you for the loan process. This includes proof of identity, credit scores, residency history, employment history, tax returns, transaction records, and more.
- What is your credit score? Having this information handy will ease the loan process, because your rates will be different depending on your credit history and credit scores. This information can be difficult to obtain (especially with the influx of “Free Credit Report” sites). Do your research and make sure you are getting an accurate credit score.
- What kinds of fees are involved? Some loans require application fees; some apply late charges, or even penalty charges for paying off the loan early.
- Factor in all of the financial needs relating to the loan. If it is a property loan, you may need to factor in any insurance or taxes you will need to pay, so you do not need to apply for a second loan, or so you don’t end up in the hole financially.
- Make sure you know what you will be paying, both per month or overall. Make sure you know how much in interest you will be paying by the time it is over, this will help you decide if the loan is worth your time and payments. Similarly, query about if any changes in the loan interest may occur. This should be in the contract, but it can be nice to know upfront before you continue with the process.
- Keep the repayment time clear, and ensure it is a time in which you can realistically repay the loan. If you rely on the off chance that you can add an extra payment per year or that you will obtain bonuses or change your career, you may end up behind on payments or defaulting.
- Speaking of defaulting, it is best to learn what will happen should you need to default or file bankruptcy. This is not a topic people like to think about, but it can happen to anyone. If you go into a loan assuming you will be able to pay it back with 100% certainty, and it turns out the penalties can ruin you, you will kick yourself for not doing all of the research.
- What can you use the money for? It sounds weird, but there are limitations to what certain loans can be used for. This isn’t to say they will spy on you, but they can ask for proof of purchase of things related to your loan. Find out exactly what the loan is approved for and do not stray from that path.
Everything stated above should be provided by the lender, but asking questions face to face, in a non-legal verbal format can help you make your decision on who would handle your business in the best possible way.