Do you need money to tackle a home improvement project? Are you seeking funds to pay for your child’s wedding? Are you hoping to take a dream vacation in the near future? Do you have the desire to consolidate debt?
If you answered yes to any of these questions, a personal loan may be the right place to turn for funds.
As you begin your search, you’ll realize there are hundreds of lenders to compare. Furthermore, you can complete an application online, thus speeding up the process and saving you from spending an inordinate amount of time on the phone.
When searching for a personal loan, it’s easy to get caught up in basic details such as the term and interest rate.
While these details are important, it’s critical to move beyond them. Here are four overlooked questions that deserve your attention:
1. Can you borrow as much money as you need?
Generally speaking, personal loans range from $5k to $50k. So, if you need to borrow $100k or more, you should consider other options, such as a home equity loan.
Some lenders may not be able to meet your borrowing requirements, while others can. This is why it’s critical to shop around, learning more about a minimum of three to five lenders.
2. What is the overall cost of the loan?
It’s easy to get so caught up in how much you’re borrowing that you overlook the overall cost of the loan.
Lenders are in the business of making money, so they’re not going to offer a personal loan with zero percent interest.
Ask the lender to provide the overall cost of your loan should you pay no more than the exact amount due each month.
3. Can you pay off the loan early without penalty?
While you’re only required to make the minimum monthly payment, you may find that you want to accelerate the process.
Choose a lender that permits you to pay off the loan early without penalty. You never know when you’ll have extra money to throw at the loan (or this may be your plan from the start).
4. Are there any “hidden” fees to be aware of?
When it comes to borrowing money, regardless of the type of loan, you must always beware of the potential for hidden fees to come into play.
For example, some lenders have origination fees, such as one to three percent of the amount you’re borrowing.
Ask about fees upfront and take steps to protect against paying them.
If you fail to address these often overlooked questions, there’s a greater chance of choosing the wrong lender and/or financial product.
Fortunately, it only takes a few minutes to address these questions with the idea of better understanding what’s available to you and how to proceed.