| T. O' Donnell | | | | Be wary of promises of getting a loan quickly. Many |
| So, you want to get a loan? Here are some simple tips | | | | borrowers are told that their loans will close within a |
| that will help you make an informed decision about | | | | particular time. They don't make payments on existing |
| what kind to buy, and who to buy from. | | | | debts, in anticipation of the new loan. |
| A loan varies according to: | | | | After several delays, they become delinquent, with no |
| - The amount borrowed; | | | | money from the new loan. Some mortgage |
| - The interest rate; | | | | companies then order new credit reports, and charge |
| - The type of rate (fixed or variable); | | | | the borrowers higher fees, and a higher rate, because |
| - The term (length in years) of the loan; | | | | of the delinquent loans, which resulted from delays |
| - Deposit (downpayment); | | | | caused by the loan company! |
| - Associated fees (broker, origination, prepayment etc.); | | | | Submit a neat application form; it shows you're |
| - Insurance required by the lender. | | | | business-like and efficient. It will be read and assessed |
| You are buying money for more than it cost the | | | | by a human being; appearances count. |
| lender. Simple. | | | | Only pay up-front fees to well-known or highly |
| It's a mistake to only care about the interest rate; there | | | | recommended institutions. While most institutions are |
| are also *arrangement fees* and *prepayment | | | | reputable, it is always best to be cautious. |
| penalty* clauses to consider. This is how brokers and | | | | Don't sign documents without reading them. As soon |
| lenders make their money. Work out the total cost of | | | | as possible, before you close the deal, review the |
| your loan before committing. | | | | documents you'll be signing, and make sure you |
| Keep a copy of every cheque you write for your loan. | | | | understand them, so you won't have to sign them in a |
| If you call your lender about your loan, make sure you | | | | hurry. |
| get the full name of the person with whom you speak. | | | | Keep your credit line as small as possible. You could |
| Make a note of it. You may be dealing with a large | | | | be turned down for other loans, even when your credit |
| bureaucracy, and will need to refer to this conversation | | | | line has a zero balance, since a large credit-line |
| later. | | | | indicates a large potential outgoings. |
| Do a budget. Make sure you use realistic figures. Keep | | | | If your spending is out of control, don't get a home |
| all of your receipts, or keep a record, for all of the | | | | equity credit line to pay off your credit cards. Don't put |
| money that you spend for a month. Use that to help | | | | your home at risk by spending large amounts on your |
| you compile the first draft. | | | | credit cards, after paying them off with your credit line. |
| Be prepared to review and update it regularly. A | | | | Pay off small debts before the due date. Cancel credit |
| co-ordinated budget allows you to get the most loan | | | | cards you are not using. Loan officers tend to count |
| for your money without beggaring yourself, while | | | | the total line of credit - even if you owe nothing - as a |
| getting rid of wasteful spending. | | | | liability. They will only cloud the picture. Close credit lines |
| Avoid 'quicksand' loans. These contain combinations of | | | | that you have no intention of using in the near future. |
| the following attributes: | | | | Also look closely at the interest rates and fees, when |
| - Short-term; | | | | deciding which cards to keep. |
| - High up-front fees; | | | | Choose a lender with a clean record with the industry |
| - High rates; | | | | watchdogs in your country. The mortgage industry |
| - Balloon payments; | | | | receives a great number of complaints against it. In the |
| - Excessively high late fees; | | | | UK, credit brokers of any kind must have a licence |
| - Prepayment penalties. | | | | from the OFT, and if they lose it, the OFT publishes |
| Quicksand loans can swallow up any equity you may | | | | this on their website. |
| have, and ruin your financial position. | | | | Shop for rates when the market is calm. Rates |
| Beware of prepayment penalties. Many 'no fee' credit | | | | change from day to day, so compare lenders. The |
| lines have a pre-payment penalty. There is no need to | | | | quotes you get should all be from the same time |
| agree get a loan which contains any significant | | | | period. |
| prepayment penalty, if you have good credit. One of | | | | Check your payments are correct - Do the |
| the smartest things someone can do with a loan is to | | | | mathematics. There's a one in ten chance you could |
| prepay it. | | | | be paying more than you should. |
| All you need to do is contact your lender and ask for | | | | If you find yourself in a dispute with a lender about a |
| its prepayment procedure. Then, every so often, | | | | payment or another issue, don't send correspondence |
| check the loan balance the lender sends you, to make | | | | to the same address you send your payment. You |
| sure the additional payments have been accounted | | | | need to deal with the decision-makers, not the account |
| properly. | | | | clerks. |