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4 Essential Things to Look For When Getting a Personal Loan

Updated: Dec 24, 2021

You can take out a personal loan whenever you want to buy something but can't afford it. Personal loans can be used for just about anything, but your work isn’t done yet because you'll need to decide which lender can make you the best offer.

The first thing to consider is how much you can afford to borrow concerning your take-home pay. Because you’ll have to repay the loan, you want to be sure you can pay it back without putting yourself in a financial pinch. It might not also hurt to consider how much you can go for in terms of interest rate. Once you have this information, your next step is to compare the best offers from the lenders you’re considering. For this reason, you need to find particular features that will help you along the way.

This article lists down things to look for if you’re taking out a personal loan, so read on below to know what they are.


Rate Discounts


Any lender will practically beg on their knees just for you to borrow money from them, especially if you have good credit with a good payment history.


If you set up automatic payments, a lender may give you a discount of 0.25 to 0.5 percentage points. In some cases, lenders may reduce your rate to a whole one or two percentage points on a debt consolidation loan, but only if you let them directly pay off your debts instead of giving the money to you.

Banks also provide discounts on personal loans if you're an existing customer, especially if you have a savings or an investment account with them with a large amount of money.


Fast Funding


Personal loans can help you cover urgent expenses, like a home repair job, because they’re typically funded in under a week. Sometimes, it can be even faster than that.

LightStream, an online lending platform, has said that applications submitted before 2:30 p.m. ET on a weekday with all the required documents can be approved and funded the same day. In some cases, other lenders can also approve and fund a loan within another day or two. This is certainly helpful, especially if you need money on such short notice, such as paying for hospital bills due the next day.

To jumpstart your loan, it's recommended that you gather the necessary documents like W-2s, pay stubs, and proof of address before you start an application.


Flexibility in Payment


Interest rates vary and can be thought of as a percentage of the amount being borrowed. Keep in mind that interest rates are based on factors like your credit score and history, your debt-to-income ratio, and your other loan debts. If you have more than one loan for a vehicle, for example, you could be charged a higher interest rate to account for your increased financial risk to the lender.

Your loan’s repayment term factors into the size of your monthly payment. A longer repayment term results in lower monthly payments but more interest paid, which is a disservice. You should choose a repayment term that gives you affordable monthly payments while still keeping interest costs low. In general, repayment terms vary because some lenders let you repay a loan in three or five years, while others offer terms between two and seven years.


Excellent Customer Experience


Customer experience isn’t easy to gauge, but how your lender will accommodate you through the loan and repayment matters is crucial. Sure, autopay is an excellent service, but nowadays, that’s not enough. The easiest way to tell if a lender provides good service is to look up reviews from previous customers. Additionally, you can also look up if a lender has received any complaints in the past at the Consumer Financial Protection Bureau or Better Business Bureau websites.


Conclusion


If you’re getting a personal loan, you must look for the things we mentioned. If you don’t, you may have difficulty during repayment, or other issues may pop up, and you may not be completely protected.


Athens Finance offers programs for personal loans in Athens, AL. We offer different sizes of loans to ensure that your needs are met, even for clients with bad credit histories. We will also work to get your loan approved as fast as possible, so it’s a guarantee that you’re in good hands with us. Contact us today to learn more!


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