Getting the best deal on a first loan

For most people, the first loan is the hardest one to get

Getting the best deal on a first loan

For most people, the first loan is the hardest one to get. It can be difficult to borrow money when you do not have an established credit record for the lender to go by. In many cases, the only loans available to first time borrowers are riddled with high fees, high interest rates and unfavorable repayment terms. The best way to make sure your first loan experience is a positive one is to shop around and to provide as much documentation of your income and your creditworthiness as possible. For instance, if you have never taken out a formal loan before, but you have borrowed money from your parents or other family members, ask them to write a letter or create a document which shows the amount you borrowed and when it was repaid. Have the document notarized if possible and include it with your loan application. Having adequate proof of your income will also be a big help when borrowing money. The loan officer will want to see proof that you are able to repay the amount borrowed, so be sure to bring documentation such as pay stubs, bank statements, and tax returns to the loan interview. Having some kind of credit history (assuming it is a good credit history of course) will also be a big help. A positive repayment history with unsecured loans like credit cards will increase your credit score and gain you a better interest rate. If you have no credit history established at all, it may be more difficult to land that first loan. In many cases, it is best to apply for the loan at the institution where all your banking is done. An established relationship with a bank can be very helpful when seeking a first loan, particularly for those with no credit history established. Using your exiting bank for a first loan is often a wise move, even in cases where the interest rate is somewhat high. You can use the payment history on that loan to establish a positive credit history, and this will help you land a lower interest rate on the next loan. Once your credit is established, you will find it much easier to take out subsequent loans.

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