Youve decided you oughta take out a personal loan.
Maybe youre consolidating credit card debt, investing in home renovations or starting a small business.
But youre still not sure how to go about finding the best offer.
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The thing is, a personal loan is, well, a personal decision.
Each lender and loan varies.
Theres no one-size-fits-all option.
However, it’s possible for you to use an online personal loan search engine to shop around.
Then, use our personal loan tips below to find your perfect match.
Table of Contents
Whats the Best Personal Loan?
Interest Rates
Interest rates, also known as annual percentage rates (APR), fluctuate with the market.
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The best rate is going to be the lowest rate.
Youll also need to ask yourself: Is the interest rate fixed or variable?
A fixed-rate loan means the interest rate wont change during the lifetime of your loan.
A variable rate means it could fluctuate with the market, which is a bit risky.
Loan Amount
Next, take a look at the loan amount for which youve qualified.
(See below.)
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We typically see personal loan terms range from 24 to 84 months.
The shorter the term, the higher your monthly payments but the less interest youll pay over time.
A secured personal loan means youre using an asset (or collateral) to back the loan.
car, home, investments, savings, etc.).
An unsecured personal loan requires no collateral.
The loans youll see when shopping through MoneyLion require no collateral, which means theyre all unsecured options.
Fees
Keep an eye out for fees.
An origination fee is like a down payment.
Its money you pay upfront to show the lender youre less of a risk.
This fee is typically a percentage of the amount youre borrowing.
Penalties
The goal is to become debt-free, right?
Before taking out your loan, look into early prepayment penalties.
The best loans wont have any.
What Are the Credit Score Requirements for a Personal Loan?
As a general rule of thumb, the higher your credit score, the lower your interest rate.
And dont forget some lenders will look at your credit history, too.
If you have a defaulted loan or bills in collections, you might not be approved.
Read more to seeexactly how he did it.
Why Do I Have to Provide Personal Information?
You might also need to supply the lender with proof of employment or annual income.
Because youre handing over such personal information, see to it you trust your lender.
Youll also want to check the applications URL to confirm youre applying through the lenders legitimate site.
(Sometimes there are look-alikes with very similar URLs.)
And dont hesitate to hop on a call with a company representative to ask additional questions.
If I Dont Qualify, Are There Alternatives to Personal Loans?
If you find you cant qualify for a personal loan, dont panic just yet.
Youve got plenty of other options.
Doing this will give you some breathing room to pay down your debt without getting tangled in high interest.
Youll simply borrow against that limit then pay off what you borrow through monthly repayments.
Dont forget to build those monthly payments into your budget!
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder.
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