Applying for a personal loan? Here’s what to look out for
Finding a lender offering personal loan products is easy. But the real challenge is choosing the right product and lender which will work best for you. A loan, like any debt, is a financial commitment. You want to make sure that you know what you are getting before you sign your name on the dotted line.
When looking for a personal loan, you need to compare several characteristics while at the same time staying within your capacity to pay. Here’s what you should look out for when choosing a personal loan product.
Loan payment term flexibility
When choosing a personal loan product, one of the things you should look for is the repayment option. While most loans have regular monthly payment plans, some lenders may offer a wider range of loan terms aside from paying on a monthly basis. In this review of Marcus by Goldman Sachs, for example, they provide versatility to customers by taking into consideration their repayment preferences. Some useful repayment options include early pay-off or adding a lump-sum payment towards the loan principal.
For the most part, choosing a personal loan product revolves around finding the most attractive rates. The interest rate is a vital component which affects the overall cost of your debt. For personal loans, the interest rate usually depends on whether it is an unsecured or secured loan. Unsecured personal loans will not require you to provide security, which makes it high-risk for the lender. It only follows that unsecured loans generally have higher interest rates over secured loans.
Fees and charges
Different personal loan products entail varying fees and charges. It is important to factor in these charges because they can also significantly impact the overall loan cost. In choosing the right product, you need to look at the interest rate while at the same time balance it out with the fees the lender will charge for closing the loan. Finding the most reasonable lender fees along with attractive interest rates is the ideal situation. Nevertheless, this may not always be the case, so you will need to crunch the numbers and determine which product will offer you the best value over a specific repayment term.
Lender customer service
This may not be high on the list of things to look for, but it does matter. A lender with excellent customer service gives you peace of mind knowing that any concerns or issues you may have will be promptly dealt with. Most personal loan lenders have websites where you can manage your loan information personally. Some even have apps you can download on your phone for convenience.
Choosing the loan term which is the most comfortable for you is also important. A longer loan term may be easier on your pocket each month but will cost more overall. Consider a shorter loan term so that you won’t have to pay too much on interest rates. Paying off a loan early is always better for your finances.