Asking for a loan for a startup is the first step in owning your own business. Having a great idea that will guarantee you a profit to pay off that loan is the most important aspect of starting a business. When choosing a loan provider, it may help to do research and read reviews on websites such as luminablog.co.uk, which will enable you to find information such as how to compare the market loans based on reviews by customers of a loan agency.
When asking for a loan, we all tend to go for the first deal we get and later regret our decision. We have taken the guesswork out of what you need to know when asking for loans with our top 5 tips:
- Know your credit score. While your credit score isn’t an immediate indication of whether you qualify for a loan or not, a poor credit score can mean higher monthly repayments on your loan, as you could be considered a liability to the loan agency. If your credit score is 600 or less, it would be best to take another six months to a year to pay off more of your debts and increase your score.
- Do your research. Always get as many quotes as you can, and then compare each one line for line to see where you will get the best deal overall. A loan with a higher monthly repayment amount might have a lower interest rate than another loan offer. Always make sure you understand all the costs and terms and conditions of a loan offer. Ask the loan officer to explain everything to you in the simplest of terms so that you understand exactly what you are signing up for.
- Always be open and honest about your income and expenditure. Lying about how much you make and spend can only be to your own disadvantage, and can be considered to be fraud. Loan officers need to know your income and expenses so that they can ensure you can make the loan repayments without getting yourself into financial trouble. Lying about these costs can also lead to your loan being rejected.
- Never apply for more than one loan at a time. Each time a potential loan agency checks your creditworthiness, your credit score can drop by up to five points. Rather apply for the loan and turn it down if you are not happy with any of the terms and conditions that come with the loan.This is why doing research before you apply is the best thing to do.
- Always, always, always read the terms and conditions before signing any loan agreements. If you are unsure of any details, ask that they be explained to you until you understand the entire loan agreement 100%. Terms and conditions are often tricky and can contain hidden clauses that you might not be aware of until it is too late and you have signed the agreement with no way of backing out.