When Applying For Personal Loans, What Should I Know |

While knowing what kind of interest rate you’ll get for personal loans, and how to go about securing the best ones possible is important, there are other vital factors to consider as well. Getting a loan can be stressful, but if you do your homework that stress can be greatly reduced, and you’ll end up being much happier in the long run, because of the better deal that you got yourself by being savvy.

The following tips can help you along these lines:

Ask the lender about any processing fees. These are commonly paid up front as a percentage of personal loans, although some lenders have a flat fee. You will want to keep a running tally of all associated fees so that you can better assess the total cost of the personal loan.

Are there any penalties for pre-payment? You will want to know the details concerning early payments, and whether you can make them, when you can make them, if they are penalized, and if so, how much is the penalty?

Be aware of late payment penalties. They usually range between 2% and 3% of the total loan amount. Obviously you want to avoid this if at all possible, otherwise you’re increasing the cost of your loan.

Another thing that you want to make sure you don’t let happen is if you have set up automatic billing for your loan payments (which can often get you a lower interest rate by the way) make sure at all times that you have the money in your account to cover the payment. In this way you will avoid additional charges for overdraft fees, etc.

What, if any, are the documentation charges? Most banks will employ an outside/third party to verify your documents and process the loan application. It is in your interest to understand these charges, and factor them into your total loan cost to make the most informed decision.

When you take the time to consider all of these aspects associated with personal loans, along with the interest rate that you are being offered, you are able to get a clearer picture of the total cost. As with all types of loans it is a good idea to acquire a copy of your credit report. With this you can arm yourself with additional knowledge, and it’s also a good idea to periodically check it to make sure that it is accurate. By going to any of the big 3 credit bureaus, you are able to legally request a free copy of your credit report each year.