When it comes to an exclusive borrowing all what people think is that it’s just the formalities which needs to be worried about. Regardless of whether it is being borrowed from a bank, or the best finance company or even a friend, there are a few documentation that needs to be taken care of and people think that’s all what matters. But what really matters is the logic behind the borrowing. That’s where documentation needs to take place. Self-accessing on the pros and cons of the borrowing is more important than the documentation. Sometimes borrowing could be the turning point of a person’s life to better or worse. Therefore here are a few things which needs to be ticked off before going for a borrowing.
Need of a Co-Signer
In most of the cases, a co-signer is mandatory when it comes to obtaining a personal loan since someone needs to assure your credibility. One might think why another person would be needed if I am the person borrowing and I am the person repaying. Well, it is not that simple. Just because you agree to repay and you think you could repay it yourself, third parties need to have some sort of an assurance about you. In other words it’s more or less an endorsement which is given by someone else to ensure the lending party that in case you are unable to pay, the person endorsing you will pay the lender.
This is a very important point which needs to be taken seriously. It is extremely vital that you are thorough with this aspect before you move on to a borrowing. Most of the time this is where the lenders play their games to deceive you. In their terms and conditions they specify the duration of you repayment along with the manner in which you’re borrowing will be reduced. In some cases if the repayment period is a year, during the first six months you are technically paying only the interest whereas the time payment is not reduced by a cent. After six months, only then will the capital will start to get repaid. This is very unethical in my opinion although it is being done in the present day.
Need of Collateral
The meaning of collateral is where you keep something as a security when you obtain a personal loan. Generally you are required to keep an asset equal to the amount you are borrowing from the bank which will be kept as a security to ensure the repayment is made. This technique is as old as ever right from the start of banking where a gold smith keeps something in assurance when lending money to third parties.
Therefore it is always important to remember that obtaining a private time payment has a lot more than just the paper work. Hence it is important to be mindful when dealing with such instances.