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Three Tips to Follow Before Getting a Personal Loan

People in need of quick money can benefit a lot from a personal loan. Unlike other loans, this option is recommended because of how less expensive it is than the interest from credit cards. You can also get your money faster than home equity loans and home equity lines of credit (HELOCs). Moreover, your lender would not ask you about collaterals or how you would spend the money. You are free to use the funds however you please.


Whether you need money to finance your vehicle or purchase an appliance or pay for an emergency, you may do so. However, you could also get in trouble if you do not know how to choose the right personal loan for your needs. Fortunately, here are some helpful tips you can refer to:


Tip 1: Find Out the Details Yourself


You may encounter many bank advertisements offering the best personal rates on their websites or printed ads. While their offers might be valid, they may only cater to a selected market.


Before giving in to the personal loan offers you see in ads, make sure you check the rates yourself. To make it easier, consider getting pre-qualified first. That refers to the process of a lender assessing your qualification and giving you an estimate for credit based on the information you provide without risking your credit score. It is also referred to as the “soft” credit check.


If you choose to go through this process, you could somehow go through a similar loan application without official approval. Instead, you will receive the conditions should you pursue with your loan. This is the best way to compare your loan options.


Tip 2: Look Into the Annual Percentage Rate (APR)


Most people focus on interest rates when looking for a loan. While it is important, it should not be your sole reference when deciding. If you need to make a comparison, include the APR in your list.


In simple terms, the interest rate is the cost you pay for borrowing the principal money. Know that the APR is always more significant than the interest rate because it includes other costs you need to pay off as you borrow the money. By looking at the APR, you can assess your finances better. It includes your interest rate, origination fee, processing fee, document preparation fee, rebates, and other fees included in any transaction you plan to have.


By referring to the APR, you get a better idea of how much you need to pay off in a year than just looking at the interest rate, which disregards the other fees.


Tip 3: Examine the Fees You Need to Pay Off


You may get the money you need fast, but not knowing what fees you need to pay might ruin your budgeting plans. Here are some things you need to look at:


  • Annual Fee

  • NSF (Non-Sufficient Funds) Fee

  • Check Processing Fee

  • Late Payment Fee

  • Pre-Payment Penalty


Ask about this information before proceeding with your loan application.


Conclusion


A personal loan is one of the most attractive loan options you have if you need quick cash, but it is not always the best for everyone. Make sure you understand the setup you are entering. Just because you heard that personal loans have their advantages does not mean that it is the best solution in every case. Executing the three tips mentioned in this article can prevent you from getting caught in a loan you do not understand. So, make sure to proceed cautiously.


If you are interested in personal loans in Murfreesboro, TN, we can help you. Hometown Finance is always here to help people in need of money, no matter their background or credit. Our goal is to provide installment loans in Murfreesboro to those who need help. Please call us at 615-890-2511 to inquire today.




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