Searching for a personal loan is easier said than done for a variety of reasons. In addition to your financial requirements, you must take into consideration the hundreds of lenders that are willing to do business with you.
Fortunately, once you know what you’re looking for, it’s much easier to narrow your options and make a final decision.
Here are five details to compare when searching for a personal loan:
There’s never a good time to borrow from a lender with a less than stellar reputation. Taking this risk can backfire, as you may find yourself in a financial relationship with a lender that doesn’t care about what’s best for you.
You can learn more about any lenders reputation by reading online reviews. Furthermore, contact them by phone to ask questions and to get a better feel for the type of service they provide.
Some lenders charge a loan origination fee, which is money you pay upfront for nothing more than borrowing funds.
Since there are so many lenders that don’t charge this fee, there’s never a good reason to pay it.
Note: ask about other fees associated with the loan, such as those that you’re required to pay if you make a late payment.
3. Interest Rate
To start, you want to apply for a personal loan with a fixed interest rate. This ensures that your rate remains the same, month after month, for as long as you have the loan.
Also, compare the interest rate offered by a handful of lenders, as you’re sure to find that this differs. Generally speaking, personal loan rates range from 7 to 25 percent.
The lower the interest rate the lower the monthly payment, so this should be one of the primary points of consideration when comparing personal loans.
Most lenders offer personal loan terms ranging from 36 to 84 months, however, you may find some that provide both shorter and longer options.
The longer your term the lower your monthly payment. Of course, this also means you pay more in interest over the life of your loan.
Tip: ask each lender if there is a prepayment penalty, as you may want to pay extra money when available to you.
5. Application Process
Applying for a personal loan is a big decision. For this reason, it’s easy to shy away if the application process becomes too stressful or complicated.
With the help of technology and the internet, most lenders have streamlined the application process. This allows you to submit all the necessary information online, and receive a decision within one to two business days.
When you compare these details, you’ll find yourself moving toward the lender that offers the personal loan product that’s best for you and your financial situation.
As long as you know exactly what you’re getting, you can move forward with confidence in knowing that you’ve made the right decision.