Make Sure it Makes Sense
The first step is to make sure that borrowing is actually the right choice. If you’ve heard of “good debt” and “bad debt” you’re familiar with the concept: good debt pays for things that provide long-term value and possibly even gain value over time, and bad debt pays for current consumption.
Examples of good debt include:
A college degree, since people with a degree tend to earn more over their lifetimes (and they have more career choices)
The purchase of an affordable home – if all goes well – since it can provide long-term financial benefits and control over your environment (you might even get to sell it at a profit someday)
Examples of bad debt include:
Buying an expensive car, because it will lose value immediately, and continue to lose value over time (you might even owe more than the car is worth)
Paying bills such as cable, phone bills, and entertainment expenses, since there’s no way you can keep borrowing to cover basic expenses – it’ll all come to an ugly end someday
Before you borrow, evaluate how long the debt will last compared to how long the benefits will last. If it’s not an investment in your future, look at other ways to fund the need.
Borrowing Money with Bad Credit
If you have bad credit, it’s harder to get approved. Any loans you get will have higher interest rates, which means you’ll effectively pay more for whatever you’re buying. How can you improve your chances of borrowing money with bad credit?
Build (or rebuild) your credit: if you borrow money and repay on time, your credit will improve. You might not be able to get approved for the loan you want today, but over time you can get your credit to a better place. See how to establish and improve your credit, and try a small cash secured loan to get things started. Get to know your credit by checking your credit reports (for free) at least once per year, and learn how credit scores work so you understand what lenders are looking at.
Pledge collateral: if you have assets that you can borrow against, that’s always an option. But you need to realistically examine the risk – what happens if your asset (typically your car or your house) gets taken away because you can’t make payments. Will you have a place to live? Will you be able to get to work and earn an income? Will your family or anybody else suffer?
Help from friends and family: if professional lenders aren’t willing to approve your loan, you might be tempted to get some help from family or friends. While it may seem like they have plenty of extra money, it’s worth doing things on your own if possible. Their money might be earmarked for important goals like retirement or healthcare, and your friends and family might not be in the position to take a risk on lending money. Sure, you intend to repay, but life throws curveballs sometimes – what if you’re injured or killed in a car accident?
Borrowing money directly from your acquaintances can be awkward (although it helps to have a detailed conversation about expectations get everything in writing). Things might change in your relationship. If somebody is really willing and able to take the risk of helping you, consider using them as a cosigner for your loan.
A cosigner applies for the loan with you, and that person is also responsible for repaying the loan (if you can’t repay, whether you’ve run out of money, decided spend the money elsewhere, or passed away, the cosigner will be on the hook for your debt). If you can find somebody with good credit and enough income to help you qualify, see how it works to use a cosigner.
Logistics
To get a loan, you'll need to apply with lenders. It's a good idea to shop among several lenders. Costs and terms vary, and you can certainly save money by comparing offers (comparing three lenders is probably sufficient). Do all of your shopping within 30 days or less to minimize damage to your credit – if you keep applying for loans it can look like you're in financial trouble (and you'd be unable to repay).
....
0 nhận xét:
Đăng nhận xét