The process of getting a personal loan can be taxing for some. Although rate shopping is not an entirely new concept, people may find it tough to choose among numerous loan offers. Here are 5 easy steps that you can follow to pick the best loan offer. ⭐Personal Finance ⭐Money Management
Life isn’t always a bed of roses. You may face a cash crunch at some point. To cater to such needs, tapping into your savings may not be the best idea. A personal loan, if used wisely, can alleviate your financial stress. But sometimes, even securing a good loan offer may seem farfetched. So, here are 5 easy steps to help you choose the best loan offer.
A personal loan is a financial tool that can help you solve a variety of purposes. You may use it to consolidate your debt, finance your wedding or start a home improvement project. The repayment for a personal loan is often fixed over a pre-decided payoff period, with lower interest rates than credit cards.
Although, one pre-requisite to securing a loan that would top the list, is knowing where your credit stands. When you start loan shopping, you’ll find a variety of lenders that offer feasible interest rates on personal loans. But not all of us can get the best deal on the table. A key determining factor in your loan application, is your credit score. Your credit score is pivotal to your loan application, because lenders propose their interest rates based on it. A good credit score will fetch you loan offers with affordable interest rates. Therefore, checking your credit report and score, before starting your loan search is good practice. Knowing your credit score will help you identify lenders with whom you have better chances of approval. Furthermore, you’ll know the interest rates and loan terms that you can expect with your credit score.
Now that you know how your credit score can impact your application, here are 5 steps to help you bag the best loan offer:
- Work out the amount you need to borrow: This has to be the first and foremost step in planning your loan. Crunch some numbers and work out how much you need to borrow to get through. You could do this by assessing your income and expenses over a month. Then, see how much you can afford to repay. Once you get more clarity on your finances, jot down the amount of money that you plan to borrow.
- Decide a suitable loan term: Once you have the loan amount, the next thing you need to work on is the loan term. Decide a tentative period in which you think you’ll be able to repay the said amount. A good way to start this would be by evaluating your income and expenses. Next, you should prepare a plan to tackle the worst case scenarios. What if you lose your source of regular income? Will your savings suffice for the loan’s repayment? It is always wise to have a back-up plan for such unforeseen situations.
- Create a repayment plan: The next step is to plan the repayment of your loan. It is imperative that the loan’s obligations are met. This is because a default can be detrimental to your credit score. So, try to create a plan, with respect to the loan amount, to calculate your monthly payments. Once you have that number, check whether there’s room in your budget for those repayments. This step is crucial when you have financial constraints.
- Shop around for loan offers: Now that you have a clearer picture, shop around for loan offers. You never know what’s out there until you explore the market. Instead of accepting the first offer that you get, compare loans from different lenders. LoanTube can come to your rescue. Compare rate-locked loans from multiple lenders to find a loan that suits your needs the best.
- Fix your interest rate: Fixing your loan’s interest rate can help you maintain a consistent rate throughout the loan’s tenure. Now, even if there’s a spike in the base rates, you will be expected to the interest initially agreed-upon by both parties. This makes it easier for you to maintain your budget accordingly.
While most unsecured loan procedures are straight-forward, it is important to pay extra attention to the fine print and hidden conditions to avoid any surprises.
- Avoid applying for multiple loans: Making multiple loan applications in a short span of time can gravely impact your credit score. This is because each lender would perform a credit check on your application, and all of this gets recorded on your credit report. This directly affects your chances of securing a loan in the future. Thus, you should keep a window of 15-30 days before starting a new application. Although, loan comparison websites like LoanTube can solve this for you, since you can compare multiple loan offers at once.
- Compare the overall cost of your loan: Don’t just look at the interest rate that a lender proposes. Go beyond the interest and consider the APR of your loan offer. APR comprises of the overall cost of your loan. This includes any extra charges that you pay for borrowing. Comparing APRs can land you a holistically cheaper deal and perhaps the best loan offer of all.
- Keep the loan amount and term consistent: When you make multiple loan applications, it is imperative that you stick to the amount you planned to borrow. Different loan terms and loan amounts will get you different loan offers. This will make it difficult for you to compare your options. So, it is wise to keep the loan term and amount same for your applications.
Personal loans are a great way to put your financial ordeals to rest. Unsecured personal loans are a popular choice among people because they don’t have to declare a collateral against their loan. However, regardless of the loan you choose, you must ensure to repay the loan in full and on time. Failure to meet repayment obligations can harm your credit score. This will further impact your chances of securing a loan in the future. Even if you pick the best loan offer, with the most suitable terms, keeping up with repayments can sometimes be tough. Try to include your loan repayments in your budget so that you always spare some money for your pay offs.
For times when you need a little helping hand to get you through a rough patch, you can count on LoanTube. Visit us to compare multiple loan offers based on Real Interest Rates.