Top tips for securing the best personal loan rates
A personal loan is a helpful financial tool that can help you achieve your financial goals and even cover sudden, unexpected expenses. However, you have to be careful in case you avail one, and if you’re planning to do so, then you’ve come to the right page. There are a lot of advantages to personal loans, and to get the most out of them, here are some tips you can practice to achieve them.
Improve your credit score
One of the first things financial institutions will check when you apply for a loan is your credit score. As early as now, make sure you improve yours or make good with any errors if there are any. In addition to that, your credit history also reflects if you are a trusted and good debtor. To improve your score, dutifully pay your bills in full and on time, and spend less than your credit limit. If you have a good credit standing, financial institutions will deem you a disciplined debtor who can manage to pay off personal loans in a fixed period.
Research the different kinds of loans
There are many different kinds of loans available out there, and it’s best to do your research on them before you take your pick. As many as there are, keep your eyes peeled for low-rate personal loans so you can plan your payment term to your convenience.
Get in touch with different lenders
Similar to how many different kinds of loans are out there, so are lenders and financial institutions that offer such. If you want first-hand information, then it’s best to inquire about their services and offers since their customer service will provide you with the necessary information, such as application requirements, process, terms, and even payment plans. As an added tip, you should also prepare your loan documents, like the application form, proof of income, and your valid ID, to make the process a lot quicker.
Only borrow what you can pay
One of the grave mistakes rookie debtors make is taking out a personal loan that’s much more than they can handle. It’s important to keep in mind that once your loan is approved, you have to adhere to a strict fixed payment for a certain period. Failure to do so will result in high penalties, and you may even get a bad rep for your credit score.
Reduce your credit card debt
This one’s a no-brainer, but a lot of people, especially first-time debtors, tend to overlook reducing their credit card debt. Remember, these little things can pile up and get heavier in time, so while it’s still possible, you might want to cut down on unnecessary expenses; trust us, your future self will thank you for it.
Make sure to apply for credit when you need it
Availing unsecured loans can be pretty easy as long as you have proof of income and a good credit score, but make sure to only apply for credit when you need it. Although unsecured loans do not require collateral and have longer payment terms, keep in mind that they also have higher rates than others.
Compare rates from different lenders and financial institutions
Many institutions offer personal loans, which can be pretty overwhelming if you’re a first-time debtor. Taxing as it is, it’s crucial that you do your research and compare rates from different lenders so you can choose the one that offers value for money.
Speaking of comparing, you can compare them through these factors:
Interest rates. When choosing a lender, one of the first things you need to look at is if they have a low annual percentage rate (APR), which is the total cost of borrowing.
Loan terms. Aside from APR, another thing you need to be mindful of is the loan term. Generally speaking, longer loan terms have lower monthly payments, but they are much costlier overall. On the other hand, shorter terms have lower costs, so choose a payment plan according to your repayment capacity.
Fees. Not all financial institutions or lenders charge origination fees but make sure to check if your choice of lender charges other fees like late or prepayment penalties. If left unchecked, these could also add up to your monthly fixed payment and cause unnecessary expenses.
These are just a few tips you can keep in mind when you’re planning to take out a personal loan. Although it might be a hassle, following them is a much better alternative and can help you save more money in the long run.
