10 Things You Should Know Before Applying for a Personal Loan
Personal loans can be a great way to solve cash flow problems. They can help you consolidate your debt, pay bills or help you out of an unexpected financial bind. You can even use a personal loan to fund a new business venture. Personal loans are great for many purposes as long as you do not use the money for frivolous things you really cannot afford. Additionally, any time you take on new debt, you should understand what you are getting into. Here are ten important things you should know that will help you find a great deal on a personal loan.
Fill out an application at a website like creditloan personal loans or even prosper and they will submit your application to different vendors
A large part of what determines whether or not you are approved for a loan and how high the interest rate is depends on your credit report. A lender will typically pull credit reports from Experian, Equifax and TransUnion and compare your credit score New Mexico cash advance from all three. If you know your scores before you apply for the loan, then you can get a ballpark idea of what interest rate percentage you should be eligible for.
Examine all your loan offers carefully and look for “hidden” fees
While you are looking at your FICO scores, check your credit report for errors. All too often people end up with lower scores than they should because of errors on their credit report. If you can find and correct these errors before you apply for a loan, then you will greatly improve your chances of getting favorable loan terms. It can take up to 30 days for the bureaus to resolve these errors, so you should pull your reports as early as you can.
Different lenders have underwriting guidelines, so not all their offers will be the same. Applying online is faster than going to multiple banks and online lenders tend to have higher approval levels and better loan terms. You are not obligated to accept any offers once you fill out the application, but is a nice, quick way to make comparisons.
Almost all personal loans have fees besides principle and interest. Sometimes a lender may charge a lower interest rate, but charge higher fees to make up the difference. In these cases, you want to make sure you know the total cost of the loan so that you can compare apples to apples. What looks like a good offer on the surface could be loaded with fees.
The longer you have a loan out, the more interest you pay. Before you even apply for a loan, you should know how much of a monthly payment you can reasonably afford. If you do not already have one, set-up a budget to figure out how much you can pay each month. Once you have determined your monthly amount, try to get a loan agreement that allows you to pay back the loan as fast as you can without going over your budget.
Lenders lose interest if you repay the loan early. Some lenders will include penalty fees for paying off the loan early. Your best bet, if possible, is always to get a loan with no early repayment penalties. The exception to this rule is cases where you know you can pay the loan back early and the fees for repaying the loan will save you more money in interest payments than you have to pay in fees.
There are two types of interest rates, variable and fixed. Fixed interest rates tend to be higher, by comparison, when you take the loan out, but your monthly loan payment will always remain the same. Variable interest rates may be low when you take out the loan, but as the interest rates changes so do your loan payments. On the surface, a variable interest rate may seem attractive, but a fixed interest rate is your safest bet.