What to Avoid When Getting a Loan 

Applying for a loan can be a time-consuming and mentally exhausting activity to take on. Especially for first-time borrowers who have a lot to learn about the process of taking out a loan, it can be easy to get overwhelmed. There are countless reasons why someone might need a loan, whether it’s purchasing their first home or being able to afford a medical emergency. Knowing what to avoid when getting a loan can make a huge difference for those trying to make educated financial decisions. 
 
In this article, we’ll go over some of the most common loan mistakes borrowers make and popular questions about taking out loans. With SAIL Loans’ helpful guide, those needing to take out a loan can move forward with a clear idea of what they can expect and hopefully prevent. 
 

Most Common Personal Loan Mistakes

While applying for a loan is often a cumbersome process, it's never been easier. With the increase in online personal loan merchants and services, receiving a loan has been expedited tremendously. Because of this, borrowers should be extra careful when applying for loans. It’s substantially easier to get fooled into some nonprofitable loan agreement that causes issues down the line of non-careful borrowers. Let’s review some of the most common personal loan mistakes borrowers make. 
 

Loan Mistake #1: Avoiding Credit Checks 

Everyone wants to have good credit, but one of the main reasons people strive for higher credit scores is to get approved for large purchases and loans. There is a common stigma against checking credit scores out of fear of increasing a credit score and jeopardizing one’s chances of receiving a loan. Most loan providers will require a hard credit check, and applicants with a low credit score should anticipate some obstacles along the way. Without preparing a credit profile to indicate financial responsibility, applicants can immediately cause issues down the line. 
 

Loan Mistake #2: Choosing the First Option

As we’ve previously covered, the number of loan merchants available only continues to increase with the popularity of online loan options. Ultimately, loan providers want consumers to choose their bank, credit union, or loan service over their competitors. Interested borrowers should view choosing a loan the same as choosing a car or apartment and steer clear of flowery advertisements that conceal conditions. Make sure to keep options open until the loan terms and repayment conditions are ideal. 
 

Loan Mistake #3: Falsifying Income Informations

It’s safe to say that lying about personal income levels or financial well-being when applying for a loan is ill-advised. When the loan provider processes an application, they'll review income and credit information. Exercising transparency throughout the process is crucial for proper approval, not only for the loan services' accuracy but also for the ability to pay off the loan. 
 

Loan Mistake #4: Using Credit Shortly Before Applying for a Loan

When someone applies for a loan, they attempt to prove their ability to pay off the loan. Loan services will look at credit scores, annual income, and spending habits to determine the applicant’s eligibility. Anyone applying for a loan should avoid using or applying for a surplus of credit shortly before moving forward with an application. This prevents loan services from unfairly denying an application out of fear the applicant uses their credit too quickly. 
 

Loan Mistake #5: Not Reading the Fine Print

While it might not seem very thrilling to read through a loan agreement’s terms and conditions, one of the most common personal loan mistakes is skipping over this critical information. No one should take receiving a loan lightly, especially for larger loans such as mortgages that will exist for many years. Applicants should always take the time to read over the loan agreement to make sure they can properly pay off the loan in the allotted time. 
 

Loan Mistake #6: Not Properly Budgeting for Timely Payments

Taking out a loan is all about making sure it will eventually be paid off. One of the most dangerous and sadly common loan mistakes is not properly planning for repayment. This is why understanding the loan’s annual interest rate is a critical element of reviewing loan service options. Interest can increase a loan’s amount dramatically with missed payments. Anyone interested in getting a loan should choose a loan based on their monthly budget and when they expect it will be repaid. 
 

What to Know When Getting a Loan: Common Questions Answered

By understanding what to avoid when getting a loan, first-time borrowers can ensure they make the right financial decision in the future. Let’s go over a few of the most common questions people have when applying for a loan. 
 

What Loan Options Are Available?

While applying for a loan might have once been a task reserved by those visiting a bank in person, the number of loan options continues to rise. It’s no longer a matter of if you might be able to get a loan, but how to get a loan. Loans are offered through banks, credit unions, payday loan services, or online loan providers. Each of these merchants will have unique benefits and disadvantages, which is why reviewing the fine print is always suggested before choosing a loan. 
 

Does Taking Out a Loan Impact a Credit Score?

First-time borrowers should always know how their credit will be affected by taking out a loan. An applicant’s credit rating will lower for a brief period once they have taken out a personal loan due to their increase in debt. Have no fear, if borrowers make the correct payments in a timely manner their credit score will regulate and even strengthen over time.
 

How Do I Qualify for a Loan?

Applying for a loan is simple enough, but qualifying is a different story. As we explored previously, having a healthy credit score is a substantial element of qualifying for a loan. Applicants should also ensure a few other factors are in place before applying. Borrowers should make sure they can provide: 

• Valid ID (Must be 18+)
• Contact and Address Information
• Valid Checking Account
• Employer and Income Information

 

 Apply for a Loan Today with SAIL Loans! 

When learning what to avoid when getting a loan, it’s important to choose a loan provider that you can trust. Some of the most common personal loan mistakes occur when choosing an inflexible loan service with hidden fees and unfair qualification processes. SAIL Loans simplifies applying and getting approved for an installment loan in-person or online. Our online application is quick, easy, and transparent to provide a crystal picture of what to expect. Contact SAIL Loans today to learn more!