With all of the chaos in the world right now, it is only natural to worry about the sources about our loans and other aid. After all, it feels like my email inbox is constantly inundated with spam mail about some phony loan or another from all of the online brokers that are less than trustworthy. How can we figure out who the real ones are?
To say the process is difficult is a bit of an understatement, unfortunately. With all of the false information out there, we really do need to fine tune our own skills as far as recognizing scams and offers that are too good to be true. This is particularly true when it comes to offers of cash advances, sometimes known as pay day loans.
So, if you want to learn more about how this works and how you can hone your own recognition abilities, make sure to continue reading. I will be covering that, along with some of the better options out there if you are looking to get a loan or cash advance but do not know where to turn to.
Table of Contents
The Breakdown: What are Loans?
Now, if you are unfamiliar with what a loan is, it is probably a good idea to educate yourself. There are several different types, as you can probably imagine. Now, if you live in the United States, I am sure that you have at least heard of student loans.
However, if you are in another part of the world such as Europe, that really is not something you need to worry about. That is especially true in the Nordic regions, including Norway. So, I will focus on other types today.
Generally speaking, they are a sum of money that you borrow from a financial institution. This could be a bank, governmental body, or private lender such as virtual brokers. The options are quite expansive, meaning that the field is muddied for those unfamiliar.
Of course, when you borrow this money, that means that you owe a debt to the organization (or person, in some cases) that lent it to you. Most of the time, there is a repayment plan that is a part of the original contract. So, if you are unsure at any point, do be sure to inquire about that.
Secured vs. Unsecured Loans
Now, as far as this goes, there are two categories that a loan can fall into. Those are secured versus unsecured. The most common type of secured one that we hear about are mortgages. Essentially, a secured one involves giving something to the lender as collateral if you are unable to pay.
In the case of mortgages, that is your home. You can read more about how this works on this page. Once it is paid off, though, you gain complete ownership over the property.
Unsecured ones do not require collateral. However, sometimes it does mean that you will experience higher interest rates for the same amount you would like to borrow. That is not always the case, of course, as there are other factors involved as well.
The Heart of the Process – Credit Scores and Background Checks
For those of us out there who are not overly familiar with the process of taking out a loan, there are of course several hoops that we need to jump through. It is not as simple as visiting a bank and asking for money. Instead, they will likely need to go through a variety of steps.
One of these will probably be running a credit check on the proposed borrower. You see, our credit history is tracked throughout our lives. A high score reflects well upon a person, as it demonstrates trustworthiness to a lender. You can raise a score by paying bills on time and repaying previous debts.
There are several benefits to having a high credit score. For one thing, usually you will be offered better terms on both repayment and interest rates. You can see a bit of what that looks like here, https://www.forbrukslån.no/beste-lån/, if you are curious. It includes some examples of what rates could look like.
Of course, something else a lender will look at is your income. If you do not have a stable one, it is unlikely you will be approved to borrow money. That is because in the eyes of the lender, you will be less likely to repay the amount plus the interest.
Any additional loans or responsibilities that you have that involve monthly payments will also be examined. So, that is another thing you should keep in mind if you are looking to apply. While this might seem stringent, if you look at it from the point of view of the lender, it does tend to make sense.
What to Look For in a Lender
Now, this is where it gets a bit trickier. I do not want to recommend any specific companies or anything, as that really is not the goal here. Rather, I will provide you with some positive attributes of good lenders that you should aim to find.
Perhaps the most critical thing is good communication. A good lender should ask you questions and be excellent at communicating if anything is going to change. After all, we should probably expect this as the bare minimum – not knowing that a monthly payment will increase, for example, could be a serious problem. So, that is definitely something to want.
Flexibility is another nice quality. What do I mean by that? Well, obviously their lending limit should be within the range you want. However, they should be able to work with you rather than being rigid and unchanging in their terms. Specifically, I am referring to the financing.
Naturally, they should also be able to answer questions that you might have. Not all of us are finance gurus who can read through a contract and know everything that it is referring to. Rather, we need some of it explained so that we know what we are agreeing to! A lender should not have objections to this or have difficulty with the explanations.
Next comes reputation. Have you ever heard of worth-of-mouth marketing? Well, there is a reason that many businesses consider it their bread and butter! That goes for banks and other financial institutions as well!
Consider looking at the online reviews, if you do not know anyone who has gone with this lender before. If you do, though, ask them about their experience. That should give you a good idea of what to expect, at least to some extent.
If they have a poor reputation, there is probably a reason behind it. So, do not opt for one with a bad one even if they seem like they are your only option. Likely, it will end up being some sort of scam, or the interest rates will be absurdly high. No one wants to have to deal with that.
Finally, try to find one with a lot of experience in this position. The good ones often tend to consider themselves as a partner rather than just a lender, because of the nature of most agreements. It is a long-term contract for many loans, so keep that in mind.
You should be able to trust their expertise and know that they will stay in touch. That is a sign that they will be good to work with, even if you are not overly familiar with borrowing money.
The last note I would like to make is to not be afraid of looking internationally. It is easy to stay in our comfort zones, but once we expand our horizons, we open ourselves up to more opportunities. Consider it, at least – you will not regret it at the end of the day!