Money Management

10 Tips for Getting a Personal Loan

Personal loans can prove to be helpful for people looking to consolidate their debts, remodel their house, buy a new car, or perhaps take a trip overseas. However, with the consumer credit market being in such turmoil, it can get extremely difficult to get a personal loan. Nevertheless, there are many options out there for people looking to get a personal loan regardless of their financial situation. So, how can you get a personal loan? Well, let’s take a look at a few tips and find out how:

10. Build Your Credit Score

You probably already do know a higher credit score means a lower APR (Annual Percentage Rate). So, if you are looking to take out a loan sometime in the near future, the best thing you can do to secure the best rates is to improve your credit score. Avoid applying for loans, credit cards and other forms of credit you don’t need and focus on paying off your existing debts in a timely manner.

9. Shop Around For The Best APR

Similar to any other product or service, when it comes to taking out a personal loan it is imperative to shop around and look for the best rates. Don’t settle for a rate which you cannot keep up with in the future and check out different lenders and compare the APR’s. Who knows you may actually get a loan with a reasonable annual percentage rate?

8. Check Your Credit Rating

As mentioned earlier, the better your credit score, the more likely your chances are to receive a loan at a reasonable APR. So, take a thorough look at your credit rating. If it is not in good shape, you can expect a more expensive deal than the lower rate you might have originally applied for.

7. Take A Look At The Small Print

In order to apply for a personal loan, you first need to make sure you’re eligible. And the best way to do so is to take a look at the small print. However, make sure you do not settle for a loan which you cannot cope with in the future, as some of the best buys come with the most burdensome conditions. Some banks offer certain privileges to existing customers, so make sure to take advantage of any good offer you get.

6. Are There Any Early Repayment Charges?

While taking out a loan, this may not seem to be an area of concern. But, nevertheless there could be many reasons you would want to clear your debt a little early. And since most banks and loan providers usually apply a charge on early repayments, it is better to check how much the overall cost would be before applying for a personal loan. If you feel like you can repay the loan before the loan period, it is recommended to go for a loan with no early repayment charges.

5. Look For Payment Protection Insurance (PPI)

The future is unpredictable. Where you can clear off your debts early, there are chances you may not be able to cover your monthly payments due to unemployment or sickness. Therefore, it is better to be on the safe side and opt for payment protection insurance. However, make sure to never buy a policy from your own lender, as it may cost you more when compared to a standalone PPI provider.

4. Consider Peer-To-Peer Lending

Of course, it isn’t necessary you have to go through banks when looking to obtain a personal loan. You can always consider borrowing from a peer-to-peer lender. You can find many peer-to-peer lenders online in your area or city. Usually, to be eligible for a loan, it is necessary to have a decent credit score. The rates can vary based on your credit score, but nevertheless it is an option to consider.

3. Secured Loans: Yes Or No?

Are you willing to cope with the risks of secured loans? While secured loans may have a lower APR when compared to unsecured loans, if you are unable to keep up with your payments, you could lose your home or vehicle. Keep in mind secured loans are only offered to homeowners with equity on their property.

2. Consider Borrowing More

Now, why would you do that? Well, in general, the bigger the loan, the lower your APR would be. So borrowing slightly more than you need could actually save you money on the interest rates.

1. Avoid Applying For Multiple Loans

When applying for a personal loan, it may be good to actually shop around for good rates, but never make the mistake of applying for too many loans, as it may leave a footprint on your credit record. As a result, your chances of getting declined for a personal loan will increase.

So, now that you are familiar with the above mentioned tips, getting a personal loan won’t be a problem.

Leave a Reply

Your email address will not be published. Required fields are marked *