For a youngster who is yet to start earning, acquiring a $500 loan without the help of parents might seem to be impossible. However, it is not so! It is still manageable for a youngster to get the loan provided she or he acts as per the understanding about the loan process. Before going ahead and asking for a loan, it is essential to analyze the situation from the point of view of the lender.
Putting Yourself into the Lender’s Shoe
For a lender, loans are frequent revenue sources because they earn them more than what they lend with the addition of the interest payments to the principal amount. However, this does not mean that lenders like banks will be spontaneously willing to lend you without evaluating your ability to repay. In fact, the primary concern of a lender is determining whether you as a youngster will be able to repay in the given period or not.
Therefore, you should only ask for a loan if you know how to repay by fair means as well as by adhering to their rules of repayment. Most lenders assess their borrowers on a number of major factors.
First, they will know who you are. Believe it or not, you will be judged right from the time you walk into the lender’s office, which is as based on your appearance, body language, and communication. Therefore, it is essential to look and talk like a professional. Whether wrong or right, the lender will use these factors in determining whether you can be trusted or not. Most of the times, the lender will also perform a background check, may be to peep into your credit history.
Second, the lenders will know what you wish to do with the money. Therefore, if you are using the fund for some wrong purpose like gambling or drugs, you will never get the loan. However, if you are using the loan for your education or a car, chances of getting the loan certainly increases.
Third, the lenders will also discuss about the timing, mode, and amount of repayment. These are a part of the loan terms and conditions that also include the interest rate and loan type because it helps in determining the amount to repay during each time until the full amount is paid off.
Once the lender is satisfied with the above details, it considers some more factors to decide whether to give you loan or not. Herein, the lender takes into account the collateral, credit, and income.
Peeping into the collateral helps in knowing the major assets you have, which it can seize in case you default. Your credit also plays a role in hearing a positive decision. It surely needs to be good; otherwise, you will end up paying higher interest rates.
Similarly, you must be earning well to convince the lender that you can repay. Therefore, if you do not anything worthy as collateral, have low income, or have a low credit, you are more likely to be stuck with fewer loan alternatives and higher interest rates.
Preparing to Convince the Lenders
First, have a valid need for which you are about to take a loan. Second, dress up and talk like a confident professional. Third, accept only those terms for loan, which you can fulfill. Fourth, think about your collateral and have a good credit report.