You would be surprised how many people, for example, underestimating the underestimation of the loan amount, which then is not enough for some items and so they take other substantially less advantageous loans, which unnecessarily burden them to complete the renovation at all. Or, in the case of consolidation they do not count how many disadvantageous obligations they need to pay together and then a new consolidation loan is not enough to pay all the disadvantageous debts, some of them unnecessarily remain and further burden them. Therefore, whatever your intention, how you handle the loan, do not underestimate this basic factor of “how much money I ideally need from the loan” when planning?
What other questions do you have to answer so that you do not make a mistake by choosing a loan and be clear about them?
Loan Purpose – What the money will be used for
For example, a borrower may need an ideal loan of USD 700,000, with USD 400,000 to cover all of its liabilities, debts, or at least the least favorable than the consolidation loan itself, and would like to complete the reconstruction for the remaining $ 300,000. . property, reconstructed, renovated house, cottage, apartment, or perhaps bought equipment.
It is good to write down in the case of consolidation (after the unification of loans) a complete list of individual debts:
– Which credit companies are they all in? (not only those that will be paid, but all for the necessary creditworthiness calculation)
– what are the exact balances, quantification – how much to pay?
– how much is paid off on them monthly?
As part of the reconstruction or other purpose, it is good to budget in detail how much money and exactly what you will use for as much as possible. It is especially good for you, for a clear structured overview concerning, inter alia, for the ideal amount of the loan and the related repayment depending on the annual interest and the maturity set, but also for the lender if he is interested in the exact use of the loan and such a budget (schedule) requires.
For special-purpose loans, it is necessary (or can be called back) evidence by invoices proving that the money from the loan will be, or have been, used in the past for the building savings loan, etc. It is simply good to have it most clearly, so that you have an overview of “what is worth” did not miss you then to pay all the disadvantages obligations or subsequent reconstruction and then you were not forced to seek another, probably less advantage of the loan and be able to tell the lender if necessary. happens with business loans, but most entrepreneurs know and have exactly calculated how much money is needed to carry out their business plan plan.
Of course it is possible to solve the so-called American, non-purpose loan (loan without the need to prove the purpose of its use), but if you want a more advantageous loan on interest, for example up to 6% and also possible to set longer maturity up to 20 years, a much better solution. Well, it is necessary to specify and document the exact purpose of use to the lender. In order for a loan to be called a special-purpose loan, the money must be used to renovate or build or purchase a property. This means that they have had to go for this purpose in the past and are now back-financing the loan, or will have to do so in the future after the loan has been granted.
Only in this case is a special-purpose loan and it is possible to obtain significantly more favorable conditions than an American, non -purpose loan, where you do not have to tell the provider what you will use the money for. The fact that the applicant says that the money from the loan will go on a luxury holiday is also a statement of the purpose of use, but the most advantageous purpose loan to act in such a case will not be such purpose in the box “anything ” Somewhere between purpose and purpose is then the purpose of “buying a car” or “paying my debts”. Here it is possible to solve more advantageous auto credit (autoleasing), or how many times also very advantageous loan for debt consolidation, loans.
Also, home furnishings loans may benefit from some providers. But it is still not a purposefulness in the true sense of the form of reconstruction, construction, or purchase,
Ideal amount of monthly payment
Determine how high your monthly payment will be able to pay with confidence, so that it always stays within your monthly budget. Even if your personal income or the income of your entire household is forfeited, even if only temporarily, for example, half the current amount.
Even in such a case, you will be able to continue to repay the loan properly and thus not expose yourself to the risk of a significant overdraft of the loan through subsequent penalties for late repayments – failure to meet the repayment schedule, imminent repayment. These sanctions, lending measures in case of default or late payment can be very unpleasant for the borrower, expensive especially for non-bank liabilities.
It is therefore a good idea to be very cautious about this before you even apply for a loan.