Are you in need of a personal loan? Chances are, most of us will find ourselves in this situation at least once in our lifetime. Since not all of us are born with a silver spoon in our mouths, there are days when we really need the extra money to make it through the month.
With whatever purpose you have in mind for borrowing money from a bank or other credit services, whether it is a short-term or a long-term loan, one thing is for sure: you should do your due diligence and homework before you affix your signature along the dotted line.
Personal loans don’t need collateral; which is why they are termed as an unsecured loan. Unlike other types of loans like car loans and mortgages that are intended for a sole purpose, this one can be used for any purpose.
A lender will normally check your credit score and sources of income to check whether you are able to pay back the borrowed sum and those with the highest credit score usually get the lowest and best rates. But hold on, before you rush to secure a loan, here are some tips you need to keep in mind:
ANALYZE CREDIT SCORE
As mentioned, if you have a high credit rating, then you are entitled to the lowest rate. This is the measurement of how likely you are able to pay back the money you’ve borrowed, so, needless to say, lenders would use this to see if you are worth the risk.
It’s a rating from between 300 to 850, with 629 and below being the threshold of bad credit and 720 and deemed as an excellent credit score. This number is basically affected by two factors: how much of your credit do you use up and your payment history.
Plus, you make sure to check the fine print since some lenders have terms and conditions written in the smallest of font sizes at the bottom corner of the last page that most of us would normally choose to skip through.
Additionally, check if you are even eligible for a loan to save time and money, since you are doing the staff of the creditors a favor because they don’t have to process your papers or go through your paperwork.
RESEARCH, RESEARCH, RESEARCH
Do you love shopping? Perfect, since you will have to do some windows shopping in some instances; don’t settle for the first credit service or offer you get. Looking around for other options will help you find the perfect financing source.
You should always compare and see what best fits your capacity because each service will offer different terms and interest rates. In short, you should definitely pay close attention to the annual percentage rate, which will give you an idea of the real cost of a loan.
DON’T LOOK TOO DESPERATE
You might be in dire need for some financial help, but don’t be obvious about it because it could hurt your chances too. How is this so? If you have many applications for a personal loan, especially if done online, this could leave a trail that lenders could trace before your approval.
Once they see that you have a lot on your record, then that could give an impression that you are in desperate need or you are knee-deep in financial trouble, hurting your chances of securing the money you want.
CHECK FOR REPAYMENT CHARGES
Let’s say that you can’t stand the thought of having debt but really need to secure a personal loan. Know that some lenders impose charges if you pay the entire loan earlier than the time frame indicated on the contract. If you plan to settle the amount early, then you might want to find a provider that offers no repayment charges at all.