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Preparation for Your Loan

By: Molly Wider

Finance When most individuals decide to make a large purchase, such as a home or a car, they carefully examine their finances to ensure that they will be able to make payments and still maintain an acceptable standard of living. Unfortunately, many individuals and families don't put the same careful consideration into personal loans and they therefore risk losing both their good credit standing and whatever is being used as collateral for the loan. So how should one prepare when considering such a loan? The following steps may help you determine whether you are prepared or not.

1) Determine how much you would like to borrow and for how long you are willing to make payments. Usually, the longer your loan is outstanding, the more interest you will pay.

2) As you would with a larger purchase such as a car, or a home, carefully review your budget and evaluate the amount you are able to comfortably repay on a monthly basis. Honestly consider the outcome if something unexpected were to arise, would you be able to continue making payments? Compare this amount with your answers to question #1. Do your numbers add up, or will you have to re-evaluate the length of the loan or the amount you are requesting.

3) Consider the type of loan you want. Many people aren't aware that there are many kinds of loans. Generally people go to their financial institution and apply for either a secured or unsecured loan based on their salary, credit rating and other criteria. Many don't know that if they have poor credit, or even no credit, that there are alternative solutions such as car-title loans, on which a vehicle is used as collateral. Research your options to determine what is the right loan for your situation.

4) Once you know what kind of loan you want, you should next determine which lender you would like to borrow from. Ensure that your lender is a reputable one. Check with the Better Business Bureau, or a similar entity to see if the organization has complaints against it. If you are not familiar with the lender, ask for references from previous customers.

5) Carefully review the terms of your agreement. You don't want to be trapped into a loan which pays only interest for months or even years without paying down the capital. If your loan repayment plan is for 24 months, ensure that you will have completely repaid the loan at that point and won't have to renegotiate further payments.

Applying for a loan is serious business and should not be taken lightly. Remember that if you are not able to make repayments, there will be serious consequences. By taking the right steps, you can ensure that your loan experience will be a good one.

Molly Wider is a Loan Officer for BHM Financial Group. For more information on whether or not a car title loan is right for you, please visit BHM's website at http://www.bhmfinancial.com
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