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At some point in our adult lives, we will apply for a load. It might be a small amount for a new motorcycle or a large amount for that new car, you have your eye on for a while now. Whatever it’s for, there are something’s you need to look out for when making an application for a personal loan or any other type of loan. Let’s look at some of them here today.
- Shop Around – You really need to shop around to get the best deal for you. Annual percentage rates vary from bank to bank, lending institution to lending institution, and getting the APR gives you the real cost of the loan, as it encompasses the interest due, other charges and then the penalties if you fail to make a payment. Your bank may assure you that their rate is best and that may be really true, but take a look around anyway, just to be sure.
- Fine Print – Always, always check the fine print of any load agreement. Also check that you can actually qualify for a personal loan in the first place. There are generally leaflets in most lending institutions that give you guidelines, and point out exactly what you need, in order to make an application for a loan. You might see a generic poster that says, ‘visit here for a loan application’ but you might not qualify. Be sure to check first, before you waste your time queuing and filling in forms, just to be told that you don’t qualify.
- Early Payment Penalties – Many of us when we take out a loan, really want to get it paid off as soon as possible. Some are not aware, that the loan can be paid off earlier than you signed up for, but there are usually penalties for this. It is important, therefore, to check and ask them if this is the case. It might actually cost you more, if you pay it early. If you feel strongly about paying your loan off early, then look around for a lending institution that will allow you to do it, but with no early payment penalties.
- The Unexpected – You never know what’s ahead of you and preparing for that, is a smart choice. You don’t know that your job will still be there in 2 or 3 years and you don’t know what circumstances might arise, which means you have to divert your funds elsewhere. Taking out payment protection insurance is a wise financial move, and its purpose, is to cover your payments should you get sick or lose your job. Once again shop around for the best PPI deal and see if there are exclusions, and also read the small print.
- Don’t Over Extend Yourself – Don’t apply for too many loans at the same time, as it brings attention to your finances, and it may affect your success rate for getting approved. You may look desperate and somewhat unreliable, if you have multiple loans. You may be regarded as a credit risk and the loan won’t go through.
As with everything in life, read the small print, shop around and get the best deal that suits your circumstances. Understand the risks of taking a loan and if you go in with your eyes wide open, then you will be fine.
