What should you know before applying for a personal loan?
Choosing the right bank to file a personal loan with is just as daunting as paying off the debt itself. There are vital factors that borrowers should base their decisions on before deciding. Some are obvious considerations, while others are often overlooked.
These are the things you should know before signing a policy and contract with bank representatives.
1. Interest rates.
Banks grant different interest rates and not all loan payment schemes have the same policies. Secured personal loans have relatively lower interest rates compared to unsecured personal loans. Advanced loans, however, may have higher interest rates than unsecured ones.
Always expand your list of options. Compare interest rates not from different loan plans within the same bank, but should be compared between banks. The interest rate ratio should also be practically proportional to the term (duration) of payment. Remember that some lenders may offer loans with lower interest rates but shorter payment terms, so be careful.
2. Company reputation.
Many aggressive lending companies and banks will do whatever it takes to get customers by any means possible. Banks and their employees are the best sellers! They have compelling speakers that often leave gray areas but end up convincing customers anyway. Some even resort to blackmail, often using loan sharks and other threats.
Find out if the lender has a good track record of honoring contracts and not brazenly violating them. Avoid very lenient banks that would extend the payment period on condition of doubling the interest rate without giving you other options. They surely have hidden agendas.
Persuasive banks obviously want your money more than you need your money. They are the ones who settle with bad faith borrowers, so avoid them before you get into debt.
3. Hidden fillers.
Before submitting your personal loan application, always review the payment schedule and learn about each item you need to pay. Hidden charges are very prevalent in almost all types of financial transactions, whether it’s your credit card bill, your phone bill, or even your school tuition. These are vague and unstated dues that are not clearly shown in contracts or policies.
Don’t be put off by glib talkers. Always keep in mind that they are sellers and will do anything to close a deal, even at their own expense. Lenders are walking billboards with neon lights that spell out all the pros, only the pros, and hide the cons.
For this reason, it’s best that you fill in all the gray areas in your mind and answer all nagging questions, whether you’ve already asked them twice or just came out of curiosity, before making your final decision. All the details should be laid out in front of you, both big and small. Know everything you want and need to know before signing a personal loan contract so you don’t get into debt and suffer in the long run.