5 Questions to Ask Before Taking a Personal Loan

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Online loaning is still something odd and strange for those who have never taken a loan before. You’ve probably heard some rumors about collateral and changing interest rates. More than that, people still don’t believe that lending online is 100% legal. These prejudices not only prevent you from taking a loan and create a wrong impression. The biggest disadvantage is misunderstanding and mess inside your head concerning this topic. The best remedy against such confusion is the right questions. This article is aimed to explain personal loans in Sri Lanka in the form of frequently asked questions for you to learn essential information about this service without intrusive advertising.

1. Why should I apply for a personal loan online?

Source: Medium

Personal loan services have three main benefits compared to loans that are offered in banks.

First of all, online loans are easier to get. This is one of the crucial factors for those who’re looking for “easy money” or urgent financial aid. Imagine if you’re to pay rent within a week. Where will you get this money? A traditional bank will never approve your credit earlier than in 7-14 days, plus the process of receiving loan could depend on the bank. Some banks allow their clients to use lend in a week or even later.

Secondly, the list of requirements is much shorter. Permanent residence with employment certificate sounds like nothing compared to payslips and tax information for several previous years.

Finally, the application process is much more convenient! No physical presence in a bank surrounded by dozens of waiting people seems like a big advantage especially during today’s situation in the world. Generally, 24 hours is enough to apply for a loan on an online platform.

Although, there are more individual reasons that you also need to take into consideration. Being an urgent financial assistance online lending aims to help you solve the most rapid problems. Medical issues and urgent renovation are the most popular reasons to lend money to an online loan organization. Sometimes people use swift credits to go on tour somewhere or simply to survive while waiting for an upcoming salary. A more risky variant is when people take a loan to repay another debt. Why risky? To begin with, the scoring procedure will show that you have more than one current credit and you simply could become an unreliable client. Secondly, how would you repay another loan? So, remember about bonus reasons to lend (universal for banks and companies) – you know exactly where you’ll get money to repay your loan. Here you’ll find the best offers that’ll meet all your needs.

2. What are the conditions?

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As it was already said conditions for submission on the personal loan in Sri Lanka are flexible and rather minimalistic. You should have the following things to be approved:

  • An account in a bank;
  • Confirmation of steady income;
  • National Identity Card (NIC) to confirm Sri Lanka residence;
  • E-mail and mobile number.

3. What’s a credit score?

Source: Leri Cash Advance Online Loan

A credit score is your rating which consists of your previous lends amount and repayment statistics. For online companies that are without the most significant reason to confirm or to reject your credit request.

You are considered a good client if you have a steady income. The announced income, by the way, has to be bigger than the loan repayment amount per month including the interest rate. Also, you need to own a bank account and some positive credit history. It mainly consists of your repayments on previous credits or bank card lends. Statistics show that online companies are likely to give loans to those clients who have to lend small amounts before and repaid them on time.

Unfortunately, some people don’t have a high score rating. Below you’ll find some improvement tips.

  • If your loan is not that burning put your old bills in order. There is nothing more vital for lenders than your repayment history. Some online companies can even change the interest rate following your lending past. So, earlier you pay on your bills – better score you have.
  • You won’t be given a loan coming out of nowhere (for lenders, of course). A credit score without a blotch on couldn’t seem reliable in the eyes of potential lenders. Consequently, if you plan to take big credit for business needs, don’t forget to build up a rating employing little lends during the year.
  • Having multiple credit cards though maybe convenient, for online lenders seem eccentric and suspicious. What are you hiding under the cover of these accounts? Unpaid debts
  • So, before taking a loan close old accounts that you haven’t used for a year or longer.
  • Don’t take credit rating personally. If there were problems with one particular company trying to get money on a different platform. Commonly, online loan companies don’t have a goal to rebuff your application.

4. What are secured and unsecured loans?

Source: 12monthloansonlineco

These notions don’t characterize loan as a reliable or unreliable source of money. Everything is more straightforward. Secured loans mean that a bank or an online loan company secured themselves by taking collateral. As collateral, you can give a car, house, jewelry, or deposits. You don’t need to transfer your property to the lender. Not at all! Collateral would be sold only after you would refuse to repay your loan for several times.

Every decline means that charge will grow as well as an interest rate. So, you have plenty of time before this will happen. Actually, it won’t because you’ll probably take a more profitable unsecured loan. Here you give nothing to the lending company except your personal information. Warranty is your rating and higher interest rate. Unsecured loans give you more opportunities to spend your money and reduce your risks to zero.

5. What if I have no employment certificate?

Source: Investopedia

A steady income is quite a topic as people in Sri Lanka often work without formalizing their working status. That’s not a problem though as you can prove your repayment ability through account history. Freelancers consider being employed. Also, don’t worry if you have some investments or official unemployed status. If it happened that none of the mentioned factors don’t relate to you don’t worry. You can ask your friend to be a co-signer. This is a perfect warranty for your lending company. If you have no friend or relative to confirm your reliability you should be ready for higher interest rates which aren’t a problem also! Some companies reduce the left interest rate after full loan repayment in advance.