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What to Look For in a Personal Loan

Posted September 22nd, 2010
by PersonalLoans.org Staff (no comments)

When you’re looking around for the best deal on personal loans, there are several things you should be aware of. Most people apply only at one bank or financial institution, and sign up for the first deal they are offered. Of course you can take a few moments to consider if you think you’re getting a good deal, but how do you really know? Be sure you know what to look for in a personal loan.

Comparison Shop

If you were out shopping for a new pair of shoes, or trying to decide which car to buy, you would compare benefits, features, and price across several models. Why should shopping for personal loans be any different?

Using an online marketplace, you can find out what kind of deal you could make with several lenders. You can also visit specific lenders online to compare rates and terms. Then, if you choose, go down to your local bank or credit union and ask them if they can do better. That way, when you sign your loan papers, you’ll know you got the best deal.

Loan Rates and Terms

For most people, comparing features on new cars or features on a new appliance can be fairly easy. You know what you’re looking for, and the benefits of each item are clearly identifiable. Researching the best terms on personal loans is a bit trickier, but it’s much easier if you understand the game.

We’ve listed these in order of importance, but your situation may change that order. Make sure you get the loan that’s right for your situation, and move your priorities up and down according to your needs.

  1. Get a low interest rate – the lowest you qualify for. The lower your interest rate, the less you’ll pay overall for borrowing the money.
  2. Negotiate for affordable payments. Don’t commit to pay back money on a timetable that just won’t work. If the payments are too high, see if you can lengthen the loan period. You can always make higher payments to get the loan paid off sooner if you can afford it, as long as there’s no penalty.
  3. Avoid balloon payments. These tricky little buggers can catch up with you later. Unless you’re expecting a large sum of money to fall into your lap, don’t agree to a balloon payment. If you’re unsure whether your loan has one, ask your lender or loan officer.

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