Tips on how to assess your readiness for a new loan

Often delayed loan payments or unpaid invoices can prevent you from achieving your dream. Intars Miķelsons, commercial director of the “Credit Information Bureau” (KIB), explains how to assess your readiness for a new loan.

What is my credit history?

From the very beginning, you need to collect your monthly payments and evaluate whether you can save up to pay off the loan. Often we forget all our credit obligations, so you can check the information for free on the website www.manakreditvesture.lv. Here you will find information on guarantee contracts as well as data on both current and paid loan obligations. If debts or late payments appear in the credit history, banks should be expected to reject the loan request or set a higher interest rate.

When delayed payment is made, the information about the debt payment will enter the database as soon as it is updated by the data providers, but this information will be retained in the system for another five years. This means that even if you close the debt, the bank will see that you are experiencing financial difficulties, so it is recommended to close all debts as soon as possible. On the other hand, if the debt is not paid, another ten years will appear.

If the credit history is excellent, the chances of getting a loan are high.

How much money is needed?

Even if you have a good income and can borrow a significant amount, borrow wisely – only as much as you really need. Remember that you will have to pay interest on the loan, so if you borrow more than you need, you will overpay. The credit limit of your credit card is also calculated for your loans and is reflected in your credit history; If not, consider whether a line of credit is really necessary.

If you’re planning to take out a loan for home improvement or a trip and you don’t know the exact amount of expenses, do as detailed a calculation as possible so that the loan requested is as close as possible to the actual costs.

Do not forget about additional costs!

Before signing the contract, compare the offers of various credit institutions, total loan costs and terms. Regardless of the type of loan, eg lending commission, interest payments; for example changing the payment date, postponing the payment etc. various costs for contract changes, such as At this time when the Euribor interest rate has risen significantly and could rise even higher, the monthly payment should also be expected to increase.

It should be noted that the costs of loans from fast lenders can significantly exceed the costs of loans issued by the bank, since the loan can be used immediately and for a shorter term. If you’re not sure you can pay it back, it’s better not to borrow it!

No more than 40% of income should be allocated to loan payments. For example, if the monthly income is 1,000 Euros, monthly loan payments should not exceed 400 Euros.