Recognize and avoid scams on personal loans easily.
There are many promotions on Personal Loans out there; so many one can be easily tricked into applying for a loan with terms that are not favorable for the borrower.
Learn How to get a good deal and avoid being overcharged.
Interest Rate
With the exception of certain loans and grants, all financial operations charge interests on the principal. However there is no reason for consent to abusive interest rates just because you are in need of finance. Interest rate is one of the loan terms you will have to watch closely and be especially aware of its details.
The interest rate is determined mainly by your credit score so if you want to get a low interest rate you have to make sure your credit is in good health. Request a copy of your credit report and analyze it thoroughly in search for inaccuracies.
If you happen to find any mistake, contact the credit agency that issued the report and request them to correct the problem immediately. You should then ask for a credit report to other agencies to make sure they do not have the same error too.
If your credit score is bad, your only options for getting a reasonable interest rate are to provide either collateral or a co-signer with very good or excellent credit score.
Secured personal loans carry lower interest rate due to the fact that the loan is guaranteed by an asset and if you apply with a co-signer, the co-signer credit score and history will be taken into consideration when determining the interest rate you will have to pay.
If you cannot provide neither collateral nor a co-signer you will have to get used to the idea of paying a high interest rate. Nevertheless, in order to get the best deal possible, you should shop around for a lender.
Request loan quotes to many lenders and then compare what they have to offer. This way, you will be able to get the lower interest rate available for you. There are many online lenders you can consult without even moving from your home.
Fees, Costs, Penalty Fees
Most lenders charge different fees or costs in order to grant a loan. The names vary: Administrative fees, Closure fees, Granting Costs, Issuing fees, etc. There are also penalty fees charged by lenders for several reasons such as pre-cancellation fees, late payments fees, miss payment fees, punitive interests, etc.
Some of these fees are reasonable but others are not.
You need to read the fine print of your loan quotes and contracts carefully before signing anything.
Also doubt of those lenders who claim not to charge any fees at all, they are probably charging a higher interest rate in order to do so. The opposite is also true; a significantly lower interest rate is usually associated with high issuing fees and other hidden fees you need to keep away from.
The key to getting a good deal is not to rush in. First of all, consider what your needs are and request loan quotes from different lenders, compare the loan quotes with your needs and between them.
If a loan quote seems too good to be true, it probably is. Request that lender to state on paper that there are no other fees or costs than the ones included in the loan quote. If he refuses then you know that his offer wasn’t such a great deal.
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