Kwaba Blog

5 things to know before your first loan application

Lots of people use debt to fund purchases they would not otherwise be able to afford, such as renting a home or buying a car. While loans can be great financial tools when they are used properly, they can be great adversaries as well. If you’re considering applying for your first personal loan, it’s important to know certain information, both so you can provide it to potential lenders and for your own awareness.

1. Credit score

A good credit score and credit history show lenders that you pay your credit obligations on time. The better your credit, the better your chances of securing a loan at the most favourable terms. Before you apply for a loan, check your credit score and reports for errors that could drag down your score. If your credit isn’t in great shape, we recommend holding off on applying for a loan and instead work to improve your credit by saving on Kwaba

2. Income

Of course, your monthly take-home affects your ability to repay your loan. You have to know just how much you’re bringing home each month so you’ll know whether you can afford monthly loan payments. Remember to include all income sources, not just your primary one. This may include a spouse’s income, child support, a second job or freelancing income.

Read on: How To Manage Income and Save Money in Nigeria

3. Choosing the right loan amount

Your income is the only one part of the equation. It’s also important to know your monthly debt obligations. Based on the cost associated with your needs, you can decide what you need to borrow. If your income is N50,000 a month but you pay N45,000 each month toward your debts, you won’t be able to pay off a new loan. Do not take more than you need at any time.

4. Payment flexibility

There are lenders across the market that offer artificially low-interest rates or gimmicky schemes. They make the interest rate appear low initially but as time passes, it increases substantially.  It is vital to examine the lender’s payment plan to know if it’s convenient for you to pay back. Kwaba offers convenient monthly plans for rent payments at relatively low interest rates. You can apply for a flexible rent payment plan using Kwaba. Click here to apply.

5. Customer support and response times

When it comes to financial matters, customer support is critical. You wouldn’t want a lender that takes a long time to process your loan or does not quickly respond to urgent queries. If their services are not as swift as you’d want, take your business elsewhere.

Loans are big business in the financial world. They are used to make money for the lenders. No lender wants to lend someone money without the promise of something in return. To keep from taking on too much debt, you should understand how loans work and how money is made for the lenders before you begin borrowing money from eager lenders.

You can also read;

4 common loan mistakes you should avoid making

What are credit scores and why are they important

Raji Oluwaseun

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