10 Best Tips You Should Consider Before Getting A Personal Loan
Are you planning to get a personal loan? Getting a personal loan is not an easy feat; you have to think of the rates and consider some circumstances to get it paid. Although some loan providers offer low prices, it can’t be denied that loan rates are still high.
If you want to know how to get the best personal loan for you, here are the top 10 tips to guide you.
1.Look Around and Compare
Just like any financial product, you will never know what will suit you unless you look around and compare what they have to offer. You should consider the annual percentage rate or APR and see the loan’s real cost includes fees from the interest to any other charges and payment due.
Your bank may say they can offer you the lowest rate available, but you may still find more affordable loans elsewhere.
2.Check the Contract
Before you proceed to apply for a loan, you should always check the contract and see if it suits you. Some deals come with demanding conditions. For example, there are loan providers that offer low rates but require applicants to have a card of their partner companies within the past six months. There are also some that offer the lowest loan rates to their current account customers only.
3.Consider Paying the Loan Early with No Repayment Charges
Although it is hard for some, you should consider paying your loan early. If you wish to do so, there are loan providers that apply charges for this, so you should also check how much it will cost you before you apply for a particular deal. If you think you will be able to pay your debt fast, you may consider looking for a deal that has no early repayment charges.
4.Look for the Cheapest PPI
Payment protection insurance or PPI can become useful for some people. This insurance is designed to cover your monthly loan or credit card repayments in case you can’t pay it due to some unforeseen circumstances. If you think you need PPI, you should look for the cheapest deal available. You also have to take note that PPI policies come with a long list of exclusions, so you have to make sure you understand what it does and doesn’t cover before pushing the deal.
5.Make Sure You Have Good Credit Rating
If you want to get a personal loan from leading providers, it is essential for you to have a good credit rating. Lenders are required to offer their best advertised APRs to two-thirds of applicants. So if you don’t have a good credit rating, they may provide you with a more expensive deal with a higher rate.
6.Consider Getting a Credit Card instead
Before you apply for a personal loan, you can consider getting a credit card instead. It is cheaper compared to getting any loans, as some come with zero percent introductory offers on purchases. If you can’t repay the debt within the zero percent offer period, you can choose the long term one with a low rate deal.
7.Consider Borrowing from Peer-to-Peer Lending
If you’re not into banks but want to get a personal loan, you can consider borrowing from peer-to-peer lending. Note that applicants are “credit-scored,” so you need to have a good score to be accepted. The rates here can also vary.
8.Larger Loans Come with Lower Interest Rate
Basically, the larger the loan, the lower the interest rate you can get. This may be some loan providers’ trick to make you borrow more. However, you can actually save more money if you opt for this option.
9.Never Apply for Too Many Loans
You should never apply for too many loans as it can leave a “footprint” on your credit record, which the lenders check before they approve a loan. If they see in your record that you are applying for too many loans, this makes you look like you’re desperate to have a loan or that you are having financial difficulties. Hence, lenders may not accept your application since they see you as a credit risk.
10.Learn the Risks of Secured Loans
Secured loans are more affordable compared to unsecured loans. However, it comes with high risk. Secured loans are only offered to applicants who own a home with equity in the property, and then the lenders can effectively take charge of your property if you fail to pay your loan. Hence, you should be 100 percent sure that you can meet your repayments before you opt for this loan.
Based on Materials from The Independent
Photo Sources: IMoney, Thebalances.com, Trcomarketing, Flickr