If you’ve spent any amount of time looking for credit, whether it’s a credit card, personal loan or a home loan, chances are you’ve been lied to. Well, OK. Maybe you haven’t been lied to directly, but you’ve certainly heard some claims that exaggerate the benefits of a given product. You need to be careful when you’re looking at credit offers, and make sure you understand what’s truly on the table.
Here are some of the misleading statements you might hear from lenders:
- This is a “no-hassle” loan! Loans are a hassle, period. They require you to do some legwork in the way of filling out forms and reading through contracts. In the long term, they have one big hassle: you have to pay them. Yes, some loans are easier to get than others, and some loan processes are more streamlined, but all of them have at least a little bit of hassle.
- Everyone is approved! Unless you’re talking about a payday lender with an APR of 400 percent, not everyone is approved. If your credit score is below 500, you’re probably screwed no matter what. It doesn’t mean you shouldn’t apply if you need the loan, but it does mean you face the possibility of rejection. Even if you are approved, your interest rate might be extremely high.
- It’s affordable! The lender doesn’t know for certain if you can afford a loan. Only you know if you can afford a loan. The lender will approve you up to a certain amount based on whether they see you as a risk or not, but that has little to do with your real-life expenses and cash flow situation. Always look at your entire budget before you sign your personal loan paperwork to make sure you really can afford it.
You need to realize something: lenders want to make money. They want your business. They’re going to handle that business, though, in a way that’s most profitable for them. You need to look after your own best interests when considering a personal loan, because the lender is looking after theirs.
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