Personal loan has become one of the major types of loan applied for by millions of people today. There are hundreds of personal loans to choose from, but how would you know what is right for you?
While you have that personal reason for getting a loan, you still need to check out certain factors when comparing personal loans online. This is to determine the likelihood of getting approved and if you are capable of repaying it.
The following are the important things to look for when getting a personal loan.
1. Interest rate – Interest rate in personal loan varies from applicant to applicant. There are many factors banks and lending institutions use to decide regarding interest rate. It depends on the cost of the loan you want to avail and how long you will pay the loan. Sometimes, lenders consider your credit score when determining the interest rate to put in your personal loan.
If you have a good credit score, the more affordable your personal loan can be. Don’t worry on the interest because low interest personal loan can be easily acquired as long as you have the capacity to pay.
2. Fees and charges – Banks and some lenders charge a fee for processing a personal loan once the application is approved. Some do a fix rate for any loan amount while others determine the fee by getting a fixed percentage of the loan amount as the processing fee.
You should be aware of the fees and charges before signing a personal loan agreement. If you decide to have an early repayment of your personal loan, this will also incur a fee. So assess carefully because these fees can make a significant difference to the overall cost of your personal loan as well as your monthly repayments.
3. Loan Terms – Loan terms or options on how long you’ll pay for the loan is up to you. Most banks offer loan terms up to 60 months or five years. Remember that the interest rate is also computed on the term of the loan, so the longer you will repay it, the higher the interest will be. It’s a good option if you want a lower monthly repayment, but if you are much concerned about the interest, then go for a shorter term. You can also choose from 12, 24, 36, and 48-month terms.
4. Other risks – There are risks in availing a personal loan if not taken seriously. Unlike credit cards where you can pay just a minimum amount and has an unfixed due date, a personal loan must be paid off fully and on time especially if that is only payable through post-dated checks. Once the issued check bounces, you would be taken to court and sued by the lender.
If you compare and apply for a low interest personal loan online, you should carefully assess its affordability and the interests, terms, and fees associated with it so you won’t face any problem with your lender and eventually get a good credit rating you can use for other future financial support.