TOP 5 “Lendiscore” Tips to Assist in Purchasing a Home or Car
The acquisition of real estate or a vehicle involves a thoughtful decision and purposeful savings. However, data from the Central Statistical Bureau indicates that more than a third, or 35%, of Latvian households in 2020 did not have savings. Therefore, Jānis Ozols, the director of the financial technology company “Lendiscore,” has prepared five significant recommendations that every potential loan applicant should consider before applying for credit.
Successful planning of personal budget is a significant indicator that lenders evaluate to ensure that specific commitments do not create an excessive financial burden. The ability to balance income and expenses not only demonstrates financial literacy but also provides an impression of the willingness to repay the loan on time. “Lendiscore” experts regularly emphasize that the repayment of the loan should not exceed about 30% to 40% of regular monthly income. Therefore, it is recommended to use online resources and available calculators to assess the potential loan amount and terms.
A reasonable cash flow and successful accumulation of available funds are significant criteria, but it is also important to practice payment discipline. Regular payment of taxes, bills, and services demonstrates the ability to promptly fulfil obligations. If an increase of income occurs, it is advisable to adjust monthly repayments accordingly or, if possible, repay the loan in full amount. From the lender’s perspective, this demonstrates commitment to dutifully settle financial obligations. It should be emphasized that promptly paying off loans and bills improves the likelihood of obtaining a new loan in the future.
Credit history is an essential tool for studying the loan biography of individuals or companies. This analysis, starting from the loan amount and terms to the lender, includes all information about current and previously obtained credits. Additionally, certain companies, including “Lendiscore,” use advanced data science to base their analysis on algorithms. This method helps identify signs of reckless loan guarantees, thoughtless borrowing, and delayed payment, which will be reflected in the report. Therefore, it is recommended for everyone to take care of their personal credit history independently.
Sometimes difficulties arise in meeting obligations within the specified period, leading to a request for a new loan to repay the previously issued loan. This is a red flag, but acting proactively is the first step in negotiating a solution with the lender. There are various support mechanisms and measures available. One of them is extending the loan repayment schedule or changing the repayment date. If the lender offers such services, one can also use payment holidays – postponing the repayment of the principal amount for a later time, but it should be noted that there might be an obligation to pay more in interest than initially planned.
Considering the stark statistics regarding the accumulated financial resources of Latvia’s residents, “Lendiscore” encourages developing savings habits. A common savings method is investing money. By setting aside a certain amount each month for unforeseen expenses, a portion of the funds can be redirected from available resources to long-term savings – investment platforms, bonds, stock markets, or funds, creating a prospective source of passive income.