Questions To Ask Yourself Before Taking Out A Loan

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

What plans do you have for this year that require you to consider your finances? Perhaps you know that you'll be sending a child off to college soon, or maybe you're just looking to make sure that all of your (and maybe even your parents') financial ducks are in a row. For example, it may be time to discuss your parents' estate and figure out how the mortgage will be handled should something happen to them. Thinking that your next steps may result in you taking out some sort of loan? If so, before you go about doing so, make sure you ask yourself these questions:

1. What is my current credit score?
Your credit score says a lot about your borrowing habits, and it could be a deciding factor when lenders determine your eligibility to receive a loan. If you suspect that your credit score is relatively low, see what you can do to improve it before inquiring about a personal loan - for example, you can start by making sure all of your payments are made on time!

2. What do I need to provide to get a loan?
In order to be approved for a loan, you may need to provide certain documents such as bank statements so that the lender has a clear understanding of how much money you currently have. On the other hand, it may be as easy as simply stating your income on an application! Before you move further, make sure you know exactly what you need to supply so that you don't put yourself at risk for not having the right information ready.

3. What is the interest rate?
Considering that the interest on loans has a direct effect on how much money you pay back in the long run, it is imperative that you know what it is before agreeing to borrow from any lender. At this point, your credit score will also come into play, since it can cause your interest rate to go up or down.

4. How long do I have to pay back the loan?
If you're able to handle higher payments each month, then you may prefer for a shorter payback period to minimize the amount of interest applied to your loan (and vice versa, of course). That said, it's your responsibility to ask the lender if there is any flexibility in how long it takes to pay the loan back, considering that the amount of time you need may differ from someone else.

5. Are there any penalties for pre-payment?
It isn't unusual to want to pay back more than the minimum payment if your budget allows, but for some loans, this can lead to a penalty. Therefore, it's important for you to find out the specifics of the repayment plan that you're on! After all, who wants to be penalized for paying early?

By going through these questions first, you can better figure out which loan is right for you depending on your current financial situation and circumstances. However, it is important to keep in mind that with the proper financial planning, obtaining a loan for major life events may not be necessary. Sounds pretty good, right?

When you choose to work with a team of financial planners such as those here at American Investment Planners LLC, we can help you prepare for all kinds of milestones. Take sending your child to college for instance. Instead of worrying about costly student loans, we can help you plan accordingly when they are younger so that you have what it takes to assist them with the cost of their education when the time comes. But that isn't all we can do! From retirement planning to estate planning and more, we can also help ensure that adult children have the resources and knowledge needed when it comes to the retirement and estate of their aging parents.

For more information about our financial planning services, please call (516) 932-5130 or visit us on our website today.