Things to Think About When Applying for a Personal Loan
Before rushing into a personal loan, you need to make sure you understand exactly what you are getting into. This means reading fine print, comparing rates, understanding the fees, and doing your homework. Here are four things to consider before signing any paperwork.
Check Your Credit Reports a Few Months in Advance
You don't want to get a call from your lender that there is an issue with your credit report. Check it before you take out a loan. If there are problems, get them addressed with the three credit reporting bureaus (Experian, Equifax, and Trans Union) prior to applying for a personal loan. Be prepared to present your lender copies of emails, letters, and payment receipts that prove you do not owe the money or have paid on overdue accounts.
How Much Can You Really Afford?
Banks lend based on your current financial status. They don't take lay-offs and health issues into consideration. It's better to borrow just enough so that if your circumstances change, you'll still be able to make the monthly payments. If you are going to stretch your budget to an uncomfortable level, pay off your debt in stages. When it comes to debt consolidation, focus on debt with the highest interest rates first. Once you've paid that off in three or five years, take out a new loan to pay off more.
Before agreeing to a loan, compare rates with other online lenders or local banks and credit unions. These financial institutions all want your business, so they will be competitive. Local financial institutions know they are no longer just competing against other banks in town, they have to compete with online banks, too. This can help you save money, because online banks offering personal loan options do not have the same overhead costs as a brick and mortar bank and usually have the best offers.
Read the Terms and Ask Questions
Make sure you understand all of the terms attached to your loan. Pay close attention to what happens if you make a late payment. If the wording is confusing, ask for clarification. Make sure you get the clarification in writing, so if there is ever an argument, you have the proof you need. A simple note of what someone told you over the phone will not be enough to back you up.
With a huge range of personal loan options available today, you are no longer at the mercy of your bank. You have the power to find the best offer for your needs. Use the Internet to research offers and find the personal loan product that meets your exact needs and expectations.