You can think of a personal loan for a number of reasons, it might be to pay off your credit card outstanding in one go, or your tuition fees, renovating your house or even for a holiday. Before you make a decision of opting for a personal loan it is better to go through the terms and conditions in details so that you do not land up paying more than you bargained for. There are different types of personal loans and getting a little information on these will be a big help so that you can opt for the right one. The first step is applying for one.
What are the things to consider before you apply for a personal loan?
- Before you make up your mind about taking loan from a specific company, you must take your time to compare the different loans available along with the interest rates. You need to know that you will be paying the installments either monthly or you can work out on fortnightly payments. You can think of securing your loan by being able to attach your assets to it. This can help you in getting a lower rate, or you can leave it unsecured.
- There are different personal loans so getting some information on these will assist you in a right choice.
a) Secured– These loans are normally tied to an asset like a boat or a car used as collateral in case there are problems for repayment of the loan.
b) Unsecure– This does not offer any security to the bank or any other financial institution you have taken your loan from, as this is not tied to any asset. These loans normally have higher interest rates as compared to secured loans.
c) Line/overdraft of credit– This loan works on the lines of the credit card where you can spend to a limit which is agreed upon and only pay the interest on the amount which is outstanding. There is no requirement of paying the full amount within a specified time. You do find that personal loans work cheaper when compared to other forms of finance but you do need to pay these off on the time specified.
Compare the different Personal loans
Though personal loans do work beneficial but you need to hunt around and compare the different rates of interest to ensure that you get the best possible deals. You need to compare the interest rates as these determine how much you will be paying every month. This should fit into your budget and it must not be problematic. You find that there are many financial institutions and even lenders which charge application and ongoing fees, make sure of this before you apply. You can find out if you are allowed to repay the loan before if you have extra cash without being charged additional interest.
Check on the borrowing limits and the terms and conditions for the personal loan
Find out if the lender is able to approve of the amount required by you. You don’t need to visit the lender; this can be done over the phone or it can even be found online. Find out the time period given to you to repay the loan, there are some lenders which give these loans for a period of only six months, which might not work suitably for you. You need to know that there are firms which give these personal loans for a period of 7 years, and sometimes even 10. Decide how long you need to repay the loan before applying. Make sure you approach banks and other well reputed financial institutions for you loan, it is safer to avoid small firms you have never heard of.
Get hold of all the information required before you take this applying for a personal loan!