Are you considering the idea of applying for a personal loan? Are you wondering if this is the right decision? Do you have concerns about choosing the right lender?
There is no shortage of personal loan lenders to compare. And while it’s sure to add time to the process, doing so is one of the best decisions you can make.
Not only does this improve the likelihood of choosing the right lender, but it also gives you peace of mind when making such a big financial decision.
Here are three of the most important questions to ask your personal loan lender:
1. What are the fees associated with the loan?
Even if you qualify for a personal loan, you may have some reservations as you learn more about the fees.
Some of the most common include: application fee, origination fee, and payment protection insurance.
Also, as you pay down the loan, you could run into fees such as those for late payments and prepayments.
Discuss any concerns before you sign on the dotted line.
2. What repayment terms are available?
Most personal loans are available in terms ranging from one to five years, but you may find some lenders with other options.
Compare the payment and interest paid for every available term. This will help you understand what fits your budget and the cost of the loan over its entire life.
3. What interest rate to I qualify for?
With good or excellent credit, you’re likely to qualify for a personal loan. But that’s not good enough. You want to search around to ensure that you secure the lowest possible interest rate.
As a general rule of thumb, the shorter your term the lower your interest rate. Keep this in mind as you compare terms and lenders.
While these three questions are among the most important to ask, here are several others you can answer on your own:
- How do you plan on using the personal loan?
- Do you have the money necessary to comfortably repay the personal loan?
- Which lenders have the best reputation for providing high quality financial products?
Applying for a personal loan is a big decision. Should you take it lightly, you could end up with debt that puts unnecessary strain on your finances.
By asking and answering the questions above, you’ll better understand if a personal loan is right for you. At that point, you can make a final decision as to what you should do next.