6 Truths about your Personal Loan
Personal loans can be rather easy to get if your credit is good. In spite of that, it is to your advantage if you have some knowledge about personal loans which will enable you to get a better deal – and possibly larger loans. These six things will help you get the good deal you want.
1. Personal Loans Do Not Require Collateral
When collateral is required for a loan, such as a car or home loan, it means that the object used as collateral is the guarantee that you will pay the loan back. If you do not, you could forfeit the car or home when the lender reclaims it for forfeiture of payment. Personal loans do not require collateral, but the size of the loan you can get and the interest will depend on your credit and income.
2. Your Credit Score Will Affect the Loan Details
When you take out a personal loan, you can be sure that the lender will check your credit score. Because of this, Bankrate says that it is a good idea if you check it yourself beforehand and make sure that any errors are dealt with and corrected before applying – if you want better loan terms.
3. Personal Loans Have a Fixed Interest Rate
When you take out a personal loan, a fixed interest rate will be attached to it. It is not going to change at any time while you are repaying it. You will, however, pay late fees if your payments are not on time. Huffington Post says this makes them different than credit cards because it must be paid back within a specified period of time, whereas credit cards do not have such defined periods.
4. Different Lenders Offer Different Interest Rates
Do not assume that the lender you first approach about a personal loan is giving you the best deal. Their interest rate may be higher, or the repayment period shorter than another lender. Shop around some in order to get the best deal, and don’t forget to check with your own bank – they may give you a great deal.
5. Early Repayment Fees May Be Attached to the Loan
Lenders often expect to make so much money in interest from any loan they make. To ensure that they can get a certain minimum amount, they discourage paying it off early by charging a fee if you close out the loan early. Many lenders will not do this, so be sure to ask about it before signing for a loan with this feature.
6. Better Terms Are Possible If You Provide More Information
Lenders want to be sure that borrowers can repay the money loaned to them. The more details you can provide, the happier both you and they will be. Be willing to provide more details if need be, and have it with you when you apply.
Personal loans are an excellent way to get cash when you need it. Lenders often offer lower fees on personal loans than is available on most forms of unsecured credit, such as credit cards. A secured loan, however, can enable you to get even better terms and larger loans.