The market for credit services is growing every year, and along with the number of loans issued, the quality of service also changes. Therefore, the online lending service does not surprise anyone, but many borrowers have not yet resorted to it due to the fact that they know little about it. But this method of obtaining a loan is very convenient, and for active Internet users it can be the easiest. To understand a bit about the features of the service, you are offered to familiarize yourself with the loan types first.
What Are the Types and Features of Online Lending?
There are two options to choose from. The first one is a bank loan and a payday loan online. The most important feature of online lending is the possibility of obtaining a loan without traveling around the city and spending a minimum of time. Designing such procedures in remote mode can be very convenient but it also has its own difficulties. As a rule, all questionnaires and other virtual documents have intuitive, elementary form. But not all citizens are able to fill it because for this you need to be a confident user of the Internet.
Next, you still need a number of documents that will need to be scanned. Each organization has a list of such papers. Sometimes, it is required to mail the original or a copy. It is also important to find out in advance what are the requirements for the payment of the loan. The financial company may have its own partners, and it is better to get acquainted with their list before entering into a contract. The amounts received in this way are usually negligible.
Of course, all creditors have their own limits, but it is extremely rare that a large amount is agreed, especially if you have a bad credit history. The service exists, rather, to address pressing issues or purchases with a small shortage of funds. Terms of payments also vary, but rarely exceed 30 days.
Online credit is a convenient financial tool for a modern person, and thanks to it, many issues can be solved successfully. To benefit from its use, you need only a little time in order to understand the procedure of registration.
Why Is It So Important to Share Accurate Information?
Have you heard an expression that inaccurate information is more dangerous than a bullet? Indeed, incorrect or poorly verified information can eliminate all human efforts to achieve a specific goal. Therefore, filling out a questionnaire in order to take a loan, you must correctly specify all the data. The fact is that all important points of the contract are carefully checked by the security service of a credit institution, and if a small error is detected, it is most likely that you will be denied a loan.
The loan agreement contains basic and additional clauses. For example, if you write that you are a punctual person, and in fact you are often late for various meetings or for work, then the financial institution is unlikely to be able to verify such information. But the salary will be checked for sure – so be prepared for the fact that bank employees or payday lenders may also call at work and check whether it is true.
You must specify the size of the salary very accurately. First of all, it will be possible for employees of the financial organization to immediately calculate whether you are a paying customer. Secondly, after checking all the information, the financial institution will trust you. You should take into account that wages are the most important criteria for a credit organization. According to it, they will be able to determine whether you can pay off the debt on time.
Therefore, it is recommended to immediately bring a certificate from the place of work, where your real monthly income will be indicated.
Such a paper will not only allow the bank to find out your salary immediately, but also save you time – the “verdict” will be rendered as soon as possible. For example, if you need to receive a sum of money very quickly, then try to resolve the issue in advance with a certificate of employment. Equally important is the client’s credit history. And the data are taken into account not only of the bank where you are going to get a loan, but also of other financial organizations. A specific bank submits a request to the Bureau of Credit Histories, where it is provided with customer data.
Therefore, you will not be able to hide from the bank the fact that they took a loan from another organization and could not repay it. Of course, if the questionnaire contains incorrect information about the credit history, the vast majority of cases are denied receipt of money.
However, the question arises: what should be done for people who have a bad credit history? You can honestly indicate in the application that you have a delay, and then write an explanatory letter. In it you must clearly explain why the delay occurred. The financial institution will take into account such an approach to business, which will significantly increase your chances of getting a loan.
The Most Frequent Situations for Getting a Loan
The definition of important may differ for customers and lenders sometimes. But in fact, he/she plays a major role in making the “verdict.” Let’s give a classic example: You try to quickly fill out a form and write that you need money to buy a car (although you really need a loan for other purposes).
Bank employees check the information and discover that you already have a vehicle. Of course, mistrust of the client immediately appears – why does he need a second car? Therefore, you must honestly indicate why you need money, and how you are going to spend it. The financial institution must make an accurate calculation of the risks, and only then will a decision be made. The bank will not give money if the information is incorrect. They will not deal with those who are trying to deceive them – be sure to consider this moment!
Consumer Lending: Things You Should Keep in Mind
Consumer lending can be considered the most common banking service. That is why it is necessary to know everything about it, if, of course, you plan to borrow money. To remove some gaps in knowledge, we will try to pay attention to all the main aspects of a consumer loan. So what is the essence of consumer finance? The client receives money in the bank, which he is free to use for his own purposes. At the same time, not only a bank, but also a payday lender can provide such services. A loan is issued for a period of 2 weeks-1 month if it is the short-term loan online and for several months up to several years if you take a bank loan.
Each bank has its own conditions, but the essence is always the same: a person who has a stable income can count on a consumer loan. Otherwise, to expect to get a loan will be quite difficult. What should be the age of the borrower? Consumer credit can take any individual whose age has exceeded 21 years. There is also a number of banks that issue loans to eighteen, citizens, but there are very few of them left. As for the maximum limit, it is usually 70 years. What papers do you need a person who wants to issue such a loan? Each bank has its own requirements for the necessary list of documents. In this case, it all depends on the amount of the loan. The minimum requirement is to submit two identity documents (one of them is a passport). But the larger the loan size, the more documents the security service will require from the borrower. What could be the interest on the loan? Consumer loan may have a very different rate. Everything can depend, as already mentioned, on the bank itself, the level of income of the borrower, the amount of the loan, the number of documents submitted, etc. But on average, the interest rate ranges from 10 to 15 percent. If we are talking about credit cards, then the percentage will be several percent higher. What is the essence of a consumer mortgage loan?
Many people often have to apply for loans, which inherently had similar features of both consumer and mortgage loans. Such loans include the design of a loan for the repair of an apartment, the purchase of a land plot, etc. What is important to know about the effective interest rate? This parameter shows the total amount that the bank customer will have to pay, taking into account all fees and interest. In the process of concluding a contract, it is imperative to ensure that this value is recorded in the document.
A Bank Loan Refinancing: Nuances, Benefits, and Opportunities
Not so long ago, a new loan refinancing service appeared on the credit market, of course, if we consider in more detail, the restructuring of long-term loans was present earlier, but was not withdrawn as a separate element. What is loan refinancing? Is it worth and whether is it profitable? These issues and other nuances will be discussed below.
It follows from the economic dictionary that refinancing a loan is the attraction of a short-term interbank loan or a loan from a central bank at a significantly reduced interest rate by a commercial credit institution in order to provide a loan to a potential client with a relatively low interest rate. In practice, this procedure is getting a new loan in another bank or in the same institution where a loan was previously issued, then it will be called restructuring, with which the “old” loan is extinguished, and the new one is issued on more loyal terms.
Banks don’t want to lose customers and in some cases help the borrower to cope with a difficult situation (temporary disability, childbirth, reduction / transfer to a new place of work, etc.), in which the monthly payments become impossible, they offer restructuring current loan. In this case, it is proposed not to change the terms of the contract, but to issue a new loan on acceptable terms for the client: the interest rate is reduced, the loan period is increased, there are no fees, fines, etc.
For this you will need to re-assemble the standard package of documents. Refinancing a loan in another bank: The procedure for refinancing a current loan in another bank is somewhat different and may not always be beneficial for both the client and the new bank. The interest on using the loan is charged on the initial installments, that is, after a certain period the bank receives its interest and the payment of the principal remains.
As a result, there will be no benefit for a new bank when transferring from another institution. Often, institutions, in order to prevent refinancing in another commercial bank, impose fines / early payment commissions, establish a moratorium when the full amount cannot be paid. Therefore, when deciding whether to refinance a current loan at another financial institution, it is recommended to ask for the full calculation of payments (the cost of the loan and the amount of overpayment) and only after considering it is worth making a decision.
Do not forget that the specified such clauses in the contract, such as multivariate charging, the possibility of a bank increasing interest unilaterally reduce to “no” all attempts to reduce the overpayment.
Refinancing of the Long-Term Loans
Re-crediting a loan on more favorable terms is important for long-term loans, such as mortgages, where a small difference in the interest rate will help to significantly reduce the payment and the final cost of the property being bought. In this case, the borrower chooses at his discretion another commercial bank, makes sure that it has such a service as refinancing a mortgage loan, get acquainted with the conditions and makes a decision.
With such refinancing, among other positive things (reducing the amount of the monthly payment, increasing the term and amount of the loan), there is also a significant minus – payment of certain costs related to the execution of a new set of documents (assessment of collateral, insurance, commissions, etc.). loan refinancing both in the main bank where the loan was carried out and in the third party, but again this will depend on the debt balance, how many years interest is paid, on the borrower’s income.
When deciding to refinance your loan or mortgage, it is worth remembering that the final decision on lending is made by the bank.