FB

5 Steps to Start Your Small Business

5 Questions to Ask When Securing a New Loan

5 Steps to Start Your Small Business

Whether you're buying a new car, lots of furniture, or a new home, you'll likely be financing the purchase. Before you even begin looking, it's a great idea to educate yourself on the loan process, so you don't have any surprises.

First, get clear on what your current credit looks like and what your credit score is, as this will directly impact the cost of your loan. You can access a free credit report once a year from the three major bureaus by going to www.annualcreditreport.com. To access your scores, you'll likely need to pay a small fee by going to the bureaus' sites directly (EquifaxTransUnion andExperian) or a site such as creditkarma.com. There are typically options to purchase all three scores at once. Also, know how much you can afford, so you don't overspend and stretch yourself to the point of not being able to pay your monthly loan payments.

Next, when you're meeting with the loan officer or financial representative who will be helping you secure your loan, be sure to ask the following questions:

 

 

1. What's the interest rate? The annual percentage rate (APR) is the interest rate you pay annually on the unpaid balance of the loan.

 

2. Are there any penalties on my loan? Does paying the loan off early entail penalties?

 

3. Are there "hidden charges'' or extra charges I need to know about?

 

4. What is the total amount being financed? How much am I paying for finance charges?  

 

5. What is the total number of payments over the life of the loan?

You want to be comfortable with the answers you receive for each of the above questions. If you’re not, continue looking for the right lender to fit your needs. 

Again, the more you educate yourself ahead of time, the smoother the loan process will go. For more information and tips on securing different types of loans, consider the following resources:

PrimeWay FCU Loans Page

MoneyEd Auto Loan Finance

MoneyEd Guide to Homeownership