A short term loan can look like the financial salvation you might need. But it is important to research your options and know what is involved before you consider jumping in. Here are some smart tips to know before you apply for a personal loan.
1. Shop Around
When searching for a loan, it is imperative to drive your shopping cart around the block a few times to compare prices and select the best deal. Crunch numbers and compare the annual percentage rates (APRs) of different options because these will determine the “true cost of a loan,” including interest, additional charges and late payment fees.
Perhaps the best place to start is at your own bank. Banks and credit unions often provide preferential rates for their customers. Take this price and compare it with other loan providers like LoanSource.com which can provide a variety of rates to examine.
2. Read the Fine Print
Once you have decided on the right loan for your situation, stop and read before signing any paperwork. Read through all of the small print and the terms of agreement prior to even applying. First determine your eligibility and then scrupulously inspect the conditions. Check for fine print that talks about any charges for repaying the loan early, as well.
3. Plan Repayment Beforehand
Especially when taking out a short term loan, it is essential to plan how you will repay the loan and charges before you go ahead and take it out. The turn around time for when interest and late fees kick in is relatively short with a personal loan. So it is necessary to write a plan for repayment to ensure that you can return the funds on or before the deadline.
4. Check Additional Credit Forms
In some cases, going with a traditional credit card company could prove cheaper than a personal short term loan. If there are any 0 percent introductory offers available to you or interest-free purchases, these may prove worth investigating.
However, as with a loan, be proactive in developing a plan for repaying the card prior to the end of the 0 percent period. And when taking out a new line of credit, reserve it only for the same purposes of your loan. Do not let yourself become tempted to begin using the card on other items.
5. Carefully Select the Loans You Apply For
Many applicants prove unaware of the “footprint” they can create on a personal credit record by applying for too many loans. When filling out multiple applications online, lenders will check your credit record. A history of frequent applications appears desperate and financially unstable. Don’t let your history look like a credit risk. Be choosy about when and where you apply.
With these tips you will be better prepared to make the right financial decision for your life.