Even when we had good credit there was always a fear or something that kept us from achieving the goal of being able to borrow money. In many cases borrowing money has been an issue of redlining (a discriminatory practice that consists of the systematic denial of services such as mortgages, insurance loans, and other financial services to residents of certain areas, based on their race or ethnicity). However, it has become a lot easier for black people to get loans now than it was years ago. Yet, there are still underlying factors that keep us from getting the financial support that we need when it comes to lending. As the world grows more tech-savvy, there are still people that don’t want to see black people or people of color truly succeed and there are still barriers that need to be broken. Lending is one of these areas.

For example, when covid-19 hit, the government has the SBA lending money that didn’t have to be paid back for different reasons, but less than 8% of that money went to black business owners. When you have such disparaging numbers you can see why so many black business owners live paycheck to paycheck or have more than one gig. In addition, to business loans being a problem, there has been a denial of personal loans as well. Many times, it’s because many black people don’t have enough credit to their names to get a loan. It’s hard to get credit when you don’t have credit. But take note that getting a loan isn’t impossible. 

However, the struggle isn’t going anywhere so how do we get past the finish line of getting what we need without being white? The most important thing is to have good credit. If you have good credit you are that much closer to getting what you need from the bank. If you want credit bad enough we as a people always figure out a way. However, doing it the right way is the most important way to do it. So, let’s talk about what you need to know when it comes to getting a loan.

BEFORE YOU GET A LOAN

Nowadays it’s easy to get loans, but many of the loans really aren’t the kind of loans you as a consumer should be getting. Just because you need money doesn’t mean you should accept anything you can get. Many times when we think we are desperate for money, we make very poor decisions concerning how we go about getting money. However, those decisions can cost you far more than they are worth. Some of the worst loans you can get are Pay Day Loans, Title Loans, or using a Check Cashing Place. Those placed don’t necessarily report to credit bureaus and when they do, they only report when you don’t pay. Plus, the money that you borrow is far less than what you pay back. You can end up losing more too like your car, home, and much more. So, stay away from those loans if at all possible.

KEY POINTS OF LOANS

• • • Loan terms are agreed to by each party before any money is advanced.
    • A loan may be secured by collateral such as a mortgage or it may be unsecured such as a credit card.
    • Revolving loans or lines can be spent, repaid, and spent again, while term loans are fixed-rate, fixed-payment loans.
    • Loans can be a great lifesaver when you first open a business or in case of an emergency.

THERE  ARE 4 TYPES OF LOANS

Unsecured Personal Loans

Unsecured personal loans are offered without any collateral. Lenders approve unsecured personal loans based on your credit score. A good credit score will make it easier to get approved. Because there is no collateral involved, these loans are riskier for lenders. They offset this high risk by imposing higher interest rates on unsecured loans.

Secured Personal Loans

Secured personal loans are backed by collateral. Lenders offer unsecured personal loans against your vehicle, personal savings, or any other valuable asset. If you default on your loan, the lender can seize whatever asset you’ve put up as collateral.  Because the risk is lower, you will have a lower interest rate on these loans.

Fixed-Rate Loans

With fixed-rate loans, your interest rate and monthly payments stay the same throughout the life of the loan.

Variable-Rate Loans

With variable-rate loans, the interest rate can rise or fall depending on prevailing market conditions. However, there is usually a cap on how much the rate can change over a specified period of time. These loans usually have a lower APR as compared to fixed-rate loans.

Last thing, before you fill out a loan application do your research on the bank that you are going to, don’t go ignorant. Find out about the bank and what their stipulations are for giving loans. Find out what types of loans you can get and more importantly find out if they are prone to giving loans to black people. Second, don’t go to just one bank. Many times we hit one bank and if they say no we get discouraged. If one says no another may say yes. So, get at least 2 banks to borrow from. If you get both loans check out which has the better interest rate and remember you don’t have to accept money from both. Third, make sure before you sign the paperwork you ask all the questions you need to ask about the loan and the process. The more questions you ask, the more familiar you are with the process and it shows you’re serious about doing business. If you, do these things you have a stronger chance of getting your loan. Finally, if you know your credit score is low, don’t go in expecting to get a loan. Ask if they have a credit-building program you can use before you just ask for a loan.