How to Find the Right Personal Loan

Rushing to apply for a loan will do you no good as you may acquire a high-interest rate personal loan with many hidden charges.

Have you ever encountered a situation where you needed extra cash but didn’t know where to get some? Well, now you know that you can take a personal loan.

A personal loan can help you with your financial emergency and could be the best option for you. However, if you decide to take on a loan to compensate for your current financial needs, you must remember to choose the right personal loan that suits you the best.

What Is a Personal Loan?

A personal loan is the most common type of loan widely offered by banks, credit unions, and lending companies worldwide. It’s a certain amount of money you can borrow for various reasons, such as traveling, purchasing, or emergencies.

The money you borrow under a personal loan and its interest should be repaid within a specific period. Some lenders will also charge you additional fees for acquiring a personal loan.

Finding the Right Personal Loan for You

Before you rush to apply for a personal loan, you must take the time and learn how to choose the best personal loan that fits your needs.

Compare Personal Loan Interest Rate

The first thing you should remember before taking out a loan is to get the best interest rate available. The lower the interest rate, the smaller your monthly repayment.

Every state has its own law regarding loan interest rates. Some even have an interest rate cap for any kind of loan. It’d be best to start comparing loan interest rates in your location. For instance, if you live in Washington, you should search for local lenders that offer low-interest rates and get personal loans quick.

Comparing interest rates nowadays is easy through the lender’s website.

Compare Other Fees

Some lenders impose additional fees aside from the interest rate. So, you should also compare it for each personal loan offer.

The usual additional fees that the lenders charge are:

  • Origination fee
  • Application fee
  • Late payment fee
  • Prepayment penalty
  • Insurance
  • Returned check fee

Remember, not all loans will have these additional fees. Compare each personal loan and look for these charges to ensure that you will choose the right one for you.

Calculate the EMI for Each Personal Loan

Knowing the EMI of a loan will help you foresee the possible monthly repayment amount you will need to pay according to your principal loan amount, interest rate, and loan tenure. The EMI or equated monthly installment can be calculated using the flat rate or the reducing balance method.

Most lenders nowadays already have an easy-to-use EMI calculator on their website. You can use it and manipulate the numbers until you reach the best offer that suits your needs and capabilities.

By knowing your EMI, you will get to plan your monthly repayment strategy or know how much you can afford to borrow according to your monthly budget. So, this step is vital before you take on a new loan.

Look for Repayment Flexibility

Acquiring a loan with repayment flexibility is vital as it can reduce financial stress, especially if you are going through a financial problem. Ensure to choose a personal loan with high flexibility for repayment. You can have an opportunity to plan or strategize your monthly repayment according to your financial status.

The majority of lenders offer personal loans with full and partial loan charges. If you plan to pay off your loan before the term ends, you will only be required to pay a small fee.

Consider Other Loan Options

A personal loan is not the only option you have when you need extra cash. There are so many alternatives you can choose from that can be a better option for you according to your situation.

You can opt for short-term loans like a payday loan. There is also a quick way to hold cash by credit card cash advance. It’s also recommended that you compare all the loan types available to know which one suits you best.

Take Your Time and Don’t Rush

Rushing to apply for a loan will do you no good as you may acquire a high-interest rate personal loan with many hidden charges. You might also get a loan that doesn’t provide the flexibility you need. Instead, spend enough time doing your research, comparing, and selecting the best personal loan offer.

Disclaimer: LawTally does not endorse anything about personal loans and finance, this article is published by one of our website users.

 

Leave a Reply

Your email address will not be published. Required fields are marked *