Despite what the screaming advertisements say, the world of personal loans can be very confusing, especially for people who are considering it for the first time. Key information that you should be armed with before applying for a personal loan:
The Rate of Interest Is Not the Most Important Factor in Choosing a Personal Loan
More than the rate of interest, you should really be more concerned about the total cost of the loan. Often, lenders quoting low-interest rates are found to be charging high origination fees or fees by other names that can substantially elevate the cost of the loan.
Rather than the interest rate, you should find out what the APR is. The APR is the outcome of the interest rate and all other fees and charges that are applied by the lender and reflects the true cost of the loan in percentage terms. All lenders are required to disclose loan APRs under the law. If any lender refuses to pay you the APR, then consider that company to be a fake one which can affect you in the long run. Here are some fun facts about the personal loan area you might try on.
Personal Loan Facts To Help You Take Right Decisions:
1. All Lenders Are Not the Same:
You can get personal loans from a variety of sources like banks, credit unions, peer-to-peer lenders, and online lenders. However, you should make it a point to consider only lenders that are reputed and trustworthy as you will be more assured of getting fair rates of interest, information and policies that are transparent, ethical practices, and overall superior customer experience.
Doing the research and due diligence on the internet as well as making use of a vast array of online resources is a smart way of identifying good lenders. Online lending platforms that match your requirements with investors can be very useful in getting low rates and easy terms.
Personal Loans Can Empower You to Be Financially Responsible. Most personal loans are taken by people to bail them out of a temporary cash-deficit situation or to restructure and simplify complicated state of finances that they are unable to get on top of. Some of the most common uses of personal loans are to pay for big-ticket expenses like weddings, medical emergencies, vacations, household appliances, and gadgets, etc. when you don’t have adequate cash.
2. Debt Consolidation:
A personal loan can also be used as debt consolidation tool that will help you to get rid of expensive credit card balances and help to bring your finances under control. A personal loan when used to refinance expensive loans can help to save a lot of interest expense and make money management better.
When you take out a personal loan to repay your existing debt you also get a chance to restructure the repayment period to allow for a more affordable monthly outgo. By doing this you can considerably ease the stress on your monthly budget.
Debt consolidation loans often come at a higher interest rate, seeing your previous treatment with the other banks. It is because they want to cover up for the most that you had taken. Not only that, there is a personal loan which carries a mortgage with them. That means that you can also keep an asset of yours with the bank if you fail to pay off the debt. However, they are called mortgage loans and they work differently.
Although there are many options of personal loan which comfort you. Such as, you can also come in profit of flexible payments which allows you to pay through any one of the options. There are other benefits of debt consolidation as well.
It is an unsecured loan and they often come without much documentation. In this case, you also got to make sure that you have good documentation of everything. So that they cannot make any changes.
3. Start Saving Soon:
It is often seen that people who have savings from the very first year of their earnings, needless loan in life and also have a plan after retirement. It is because they got their savings from the very first time they started earning.
There are a lot of ways to earn money fast, but they are not all good ways. However, one of the good ways is investing in mutual funds. Mutual funds are based on share markets and stocks so, you never know how much profit will really be awaiting you. It is provided if you have invested in the long term.
If you have special income or side earnings, then you ought to invest in Gold. That is the safest way you can increase your personal finance without taking the risk of the share market. A renowned economist once said that there is no right time for savings. You can start as soon as you start to earn.
But that sometimes get itchy as your financial conditions alternate with changing work situations. Normally they increase, but one can never be enough careful. In that case, there are some personal loan apps which tell you about your credit history rate too. You can also invest in real estate.
They are known to give long-term profit if you give out it for rent. You can still earn a good amount of profit if you sell it. Real estate rates tend to increase as the location and purpose of the land begin to increase.
Getting a personal loan can be a smart move if it helps you to be financially responsible. You should look into the details of the offer very carefully to make sure that you know exactly what the actual cost is and what the terms of repayment entail. Rushing into borrowing is a sure-fire way of getting into trouble later on.
So if you have any savings then it is feasible that you for it first and see if it fits your budget. Afterward, you can also look for some cash loans from your family members or close relatives. However, that can lead to a rift between relationships.
Also, do not forget to leave a comment in the comment section to let us know your feedback on this article. Remember, a personal loan can only be availed easily if you have a good credit history. So, before taking a loan, think about maintaining your personal finance
Mashum Mollah is a tech entrepreneur by profession and passionate blogger by heart. He is on a mission to help small businesses grow online. He shares his journey, insights and experiences in this blog. If you are an entrepreneur, digital marketing professional, or simply an info-holic, then this blog is for you. Follow him on Instagram, Twitter & LinkedIn