Factors to Consider Before Applying for Personal Loans

factors to consider before applying for personal loans

Getting a loan is not something to be taken lightly. A personal loan can help you in case you need urgent financing. The process involved is fast, with some borrowers getting financing on the same day they submitted their application. There are a lot of money lending institutions, which makes it a challenge to pick the best. Read on to know what to consider before you apply for a personal loan

Purpose of the loan

This refers to the reason why you want a loan. Most people apply for personal loans to pay for education, hospitalization, and weddings. Personal loans are not recommended for businesses looking to increase their stock to generate higher returns. Knowing the purpose in advance will help you decide on the amount to borrow.

Types of personal loans

They are of two types:

  • Secured loans: Such loans are backed by collateral, such as savings. In case you fail to make the payments, the lender can claim your assets to pay for the loan.
  • Unsecured loans: For these loans, lenders rely on your financial history. There is no need for collateral.

Credit history

It is essential to check your credit score before you apply for a loan. A credit score helps you know the probability of the loan getting sanctioned. Pay off any pending credit card dues to avoid this being reflected in your credit history. To improve your score, you can close credit cards that are not necessary such as store cards. A credit score is vital when assessing an application for unsecured finance. Lenders rely heavily on your history of repaying loans in the past, and a good credit score means you can access the best rates. On the other hand, a less perfect credit score means you will pay a higher fee. There are reputable agencies that you can use to access your credit score. 

Interest rates

Most personal loans are unsecured because the amount offered by lenders is not very high. People rely on personal loans mostly for minor expenses. This means that such loans can attract a high-interest rate. Compare the interest rates offered by banks and other financial institutions carefully. Ideally, you want a personal loan with the lowest interest rate. Typically, secured loans have a lower interest rate because they are backed by collateral.

Additional charges

Other charges apply when you take a personal loan. Penalty charges are put in place in case you are not able to make a payment on time. Make sure you know the exact amount regarding the penalty to be prepared in case such a situation comes up in the future. Some money lenders charge origination fees that cover the loan processing costs. Typically, the amount is 1 to 6% of the total loan. Also, there are prepayment penalties in case you decide to pay off your loan early. Knowing all these details in advance will help you see if you can afford the loan you are wanting to take out. 

Look out for the best deal

Banks are not the only money lending institutions. There are credit unions and nonprofits that offer lower fees and rates compared to banks. Take your time and explore all the available options before settling for a specific personal loan provider. The best deal is one with a lower interest rate. If you want a loan that you will pay for a longer duration, choose a loan that offers flexibility. 

If possible, make sure you don’t skip a payment as it will affect your credit profile. Also, it means you pay more interest and service fees. Cut back on unnecessary spending and dedicate this amount to repaying the loan. Remember to take a loan you’re sure you can easily pay back and don’t live beyond your means.

References:


Haley Grant

Haley Grant is a full-time content writer at Konsus who previously worked as a freelance writer with Glamping Hub, Inc. With a degree in English Creative Writing and Business Studies from Providence College, Haley recently moved from her hometown in New York to Madrid, Spain. Haley is passionate in all things related to writing and content creation, and ensures client satisfaction in her work.


Apply Online Today to Get a Fast, Easy and Secure Loan

© 2021 SLICK CASH LOAN | All rights reserved | (888) 200-7445 | [email protected]

 

Material Disclaimer: Slickcashloan.com website’s owner doesn’t lend or represent any lender or provider of such service, doesn’t make decisions regarding credits or loans, and isn’t implicated in any way in the process of lending. Slickcashloan.com is a platform that connects potential loan borrowers with reliable and reputable loan lenders. It doesn’t regulate the lending process hence isn’t liable for the actions of the lenders. The particular lender offering the services is responsible for and controls loan terms, rates, fees, loan amount, terms of repayment, legal actions for late and non-payments, as well as cash transfer times.

 

APR Disclosure: An APR (annual percentage rate) refers to the specific rate at which loans accrue interest and is generally based on the cost, amount, and loan period, as well as the prescribed payment timing and dollar amounts. Any lender that offers loans to consumers must by law show a borrower the exact APR charged for the loan and all loan terms prior to the execution of any loan agreement. Certain states may have specific laws that limit the APR that lenders may charge any borrowers. The actual cash advance loan APR ranges from 200 percent to 1386 percent, whereas the APR for installment loans ranges from 6.63 percent to 225 percent. However, loans made in those states with no laws regarding APR limits for loans and any loans made by lenders that are not currently subject to state laws in these regards could carry even higher APRs. PLEASE NOTE: All APR rates on cash advance loans may be subject to change at any time.

 

State Regulations: Borrowers in some states might not be eligible to apply for some online loans. Additionally, loan services aren’t available to all jurisdictions or states.

 

Credit Implications: Lenders on slickcashloan.com can review a borrower’s credit history when making the lending decision. This process can involve contacting an applicant’s credit bureau to determine their credit aptitude, worthiness, and standing.

 

Loan Approval: Slickcashloan.com doesn’t guarantee approval of any loan. This website is just a platform for linking borrowers and lenders. Therefore, the decision to approve or not to approve the loan depends on the lender.

 

Borrowers Beware: Short-term lending is intended to address financial needs for a short time; hence, it can’t be used as a long term solution. Short term loans come with some costs that may make a borrower’s financial situation worse. Applicants are advised to consult with a financial expert about the risks involved in taking a short term loan and the best alternatives.

 

By using slickcashloan.com, the User acknowledges that they’ve read and understood the Privacy Policy, Terms of Use, Rates, and Disclaimer.