3 Tips To Help You Choose The Personal Loan That Is Best For You
Taking out a personal loan is a major financial decision, and for most consumers, there is no shortage of lenders and loans to choose from. As a result, you should take the time to differentiate loans based on a few factors beyond the amount, term, and interest rate. Take a look below to learn more about a few of the most important things you should consider.
Nearly every lender that offers personal loans also requires the borrower to pay an origination fee when the loan is officially processed. These are rarely fixed. Often, a lender will simply subtract the origination fee from the amount sent to your bank account. For example, if you plan to take out a loan for $10,000 with an origination fee of $75, you will only receive $9,925. If you are comparing two loans with otherwise identical terms, then choosing the one with a lower origination fee is an easy way to save a few dollars upfront.
While it is not as commonly seen in personal loans as it is in loans for larger amounts (such as mortgages), a prepayment penalty is something you should keep a careful eye out for. These are fees charged to the borrower if they choose to pay off a loan before the end of the scheduled term. If you have planned to pay back a loan over the course of sixty months, for example, but suddenly have an influx of cash that you plan to use to pay the remainder after only thirty-six months, then you may be forced to pay a small fee. Before borrowing, always check the terms of a loan to see if a prepayment penalty exists, and if so, how much it is.
Another thing you should always consider is the convenience offered by the lender and their platform. If they have a website with a user-friendly interface that allows for easy payments in a variety of forms, it may be worth spending a few extra dollars — especially if it means avoiding another lender that forces you to pay in person and with checks. While convenience should never be the sole determining factor when deciding which loan offer to accept, seriously taking it into consideration can save you from dealing with significant hassles in the long run.
For more info about consumer loans, contact a lender in your area.