When you want some advice on borrowing money, it may seem like all the tips you read are designed for veteran borrowers who have taken out plenty of loans before. But if it’s your first time, you don’t have experience on your side. Even the most basic concepts may be totally foreign.
Admitting this out loud to another person can be embarrassing, so today is your lucky day. Keep scrolling to learn some of the basics from the privacy of your home with no risk of embarrassment.
1. How Do You Borrow Money Online?
Borrowing money online is simple. You won’t have to make an in-person visit at a local branch or speak face-to-face with an advisor. You don’t even need to be an existing customer of a financial institution. In many cases, you can search out a new lender by performing a Google search.
Now, typing in “loan” into this search bar will bring up millions of results in a split second. It’s impossible to review all of them, but it’s in your best interest to shop around, comparing as many top-rated lenders as possible.
You should also keep your eyes peeled for their licensing. Although an online lender’s website may be accessed from anywhere you get the Internet, this license ensures they can only safely grant loans in specific states.
This makes your location incredibly important to the borrowing process. If you’re searching only for the best online installment loans Texas has to offer, the financial institution you’re working with has to have the capacity to provide financial options in Texas, whether they’re the lender or intermediary between you and the lender.
2. What is Bad Credit?
Before you can understand bad credit, you have to understand what credit is in general.
Your credit file is like a report card of all the times you’ve borrowed money in the last seven years. It shows how well you’ve managed these accounts, sharing details about their age, balances or amount owing, and your payment history.
Your credit score is a numerical value of your performance in the above categories, much in the same way a letter or percentage grade sums up an academic report card.
You get a bad score (or anything from 300 to 579) when you run into some problems with an installment loan or line of credit. Maybe you pay bills late or max out your limit. Neither of these things look promising to lenders, so your bad credit may stand in the way of getting an installment loan. Some lenders may deny you outright, while others may increase the rates you pay to offset your history.
3. What is Interest?
It doesn’t matter whether you go in-person or online for an installment loan. In either case, your lender will apply interest to your loan.
Interest is considered the cost of borrowing money, representing an additional charge you’ll have to pay on top of your loan amount. In most cases, it’s a percentage of your outstanding principal that may be added to your bill on a daily, weekly, or monthly schedule.
Since it’s adding money to what you’ll have to repay, interest is one of the most important features of our loan. You should always check your interest rate and how it accrues before you sign a loan contract.
Knowledge is Power
When it comes to borrowing money, you don’t want to leave a single stone unturned. Now that you have some of the basics under your belt, you may feel more comfortable asking questions when it counts. So ask them and borrow responsibly!