If you are like most people, you’ll find the majority of your transactions are paid for using either credit cards or mobile money. However, there are instances where you will still need cash to pay for things. It’s not uncommon to find that your salary may not be enough to cater to all your needs. This is why financial institutions and banks extend credit facilities to their customers.
It can take several years to save enough money to buy a car. Fortunately, there are quicker ways to get the vehicle of your dreams. For example, you can take out a loan from a bank or get vehicle financing from car dealers. Here’s what you need to know about vehicle financing and how to get approval.
Personal Loan Basics
A personal loan is an amount of money a bank or financial institution advances to cover your cash needs. For instance, you may want to buy a car or home or sponsor a wedding or trip.
If you buy a car using money borrowed from a bank, you will only gain full vehicle ownership after complete payment. As you might imagine, failing to repay the loan in full can result in losing the asset.
There are two primary types of personal loans. This includes secured and unsecured debt.
With secured personal loans, the lender will request that you provide a value to use as collateral or security for the loan. You can use vehicles, your home, or even property as collateral.
In most instances, secured loans enable you to borrow considerable cash at a lower interest rate. This is because there is a lower risk on the bank’s part since they can sell your asset to recover their money.
Unlike secured loans, unsecured debt does not involve the use of collateral. However, this makes them a riskier type of lending. As a result, banks tend to limit the amount you can borrow and charge higher interest rates.
Things You Must Look Into Before Submitting Your Application
There are many banks and lenders to choose from when applying for a personal loan. It’s advisable to compare a few options before settling on one offering.
Is the Loan Secured or Unsecured
Even after you choose a lender, you need to set aside time to look at the features of the loans they offer. For example, you must determine whether the loan you need falls under secured or unsecured loans.
If you are willing to take out a secured loan, you must look at the things you own and find out what you want to put on the line. On the other, with unsecured loans, the main concerns should be interest rates and fees.
Consider Your Affordability
Think about how much money you need and determine whether the bank will give you that loan amount. When considering how much money to provide you, banks will look at how much you earn, your monthly expenses, your current debts, and your credit history.
How Much Time Does it Take For the Loan to be Approved?
Different banks and lenders have varying approval times. It’s important to consider how soon you want to use the money before submitting your application. Banks, in particular have lengthy approval processes. If you are dealing with an emergency cash need, you better choose a lender with fast approval times.