Having projects is one thing, but financing them is another. Indeed, it is not always easy to release the funds necessary for their realization. That’s why it can be interesting to opt for a credit, regardless of the project.
In this guide, we explain how to choose the right financial product and give you the keys to make the best decision. This will make it easier for you to answer the questions “How to apply for credit?” And “Who can make a credit?”
Credit Application: Choosing the Right Product
You have a project, but financing it requires cash. The very first question to ask yourself before even considering applying for credit is what is the corresponding bank loan. It is therefore necessary to examine the project and define its nature: do you want to change your kitchen? Or have solar panels installed? If these two arrangements involve working at home, however, it will not be the same loan.
For example, in the first case, the corresponding loan is a renovation loan. In the second case, the adapted loan is a green loan, which will offer you a much more interesting interest rate. It is therefore essential to be well informed to determine which financial product is right for you.
In a second step, you will have to estimate the necessary amount to finance your project. If you want to make a particular acquisition, be sure to ask for a quote to get a clear idea of the amount you need. You can also surf the web and make an estimate of the prices present on the market of the desired object.
However, in the case of an all purpose loan, you will not be asked to justify your expenses. That means it’s up to you to decide how much you want to borrow, as well as how much you use it.
What to know before applying
Important points to consider
A loan is a financial product adapted to the needs of the client. In this perspective, the repayment term of the contract plays a key role, because it defines the rate and the monthly repayment. The interest rate will depend heavily on this duration. The annual APR or annual percentage rate corresponds to the interest paid on an annual basis plus the application fees related to your loan.
The higher it is, the more the total cost of your credit will be too. Also, be aware that a rate above 6% is likely to create what you call bad debt.
Bad debt is a debt that impoverishes you without creating real benefits. In other words, it is a purchase that is not really necessary and is more expensive than it should be in the long run. This type of debt is particularly at the origin of many cases of over-indebtedness. So think carefully before applying for credit that you may regret.
What are the documents to provide?
In order to study your case at best and be able to send you an offer corresponding to both your needs, but also your financial situation, banks will ask you to provide a number of supporting documents in order to assemble your file.
How to optimize your credit application file?
Optimizing your application is potentially increasing your chances of getting a loan quickly.
Start collecting documents
Providing a complete file from the beginning is the first thing to do: it shows your organizational spirit and that you are serious in your efforts. For example, refer to the list of supporting documents provided above and collect them before going to a bank. In addition, by consulting a financial advisor, you can already submit these documents and get an idea of the credit and repayment terms before formally filing your loan application.
To go ahead
However, asking for credit should not be a decision made on a whim. You have to think about it before you start, because you are potentially committed to years when you have to meet your deadlines. So, 6 months before you make your request, start putting your house in order to show that you have a good borrower profile.