A personal loan is a great solution for those moments when you need cash fast. Whether it is home repairs or a wedding gift, a personal loan is often used for moments of emergencies. With that said, to ensure you are better prepared when taking out a personal loan, let us consider these three important steps of taking out a personal loan.
Step 1: Know Your Credit Score
It goes without saying that your credit score will impact many aspects of your life when it comes to taking out any loan. A personal loan is no different. With the lender checking your credit score, you want to make sure everything is in good standing.
If you have never checked your credit score before, it may be time to do so. When checking your credit score, look for areas that may be alarming and potential discrepancies. With the average credit card debt in Jacksonville being $4,861 according to creditcardlocal.com, if you have a high credit utilization, you may want to pay off some credit card debt before you take out a personal loan.
Step 2: Shop Around
Once you know what your personal loan lender will be looking at, it is important to shop around for the best personal loan lender within your area. This process includes reading reviews, looking at their website, and at many times meeting in person.
If you happen to consider a bank or a credit union as your personal loan lender, then visit your local banking institution that you are considering. Most importantly, make a list of questions to ask to ensure you are well-educated and prepared before the process of applying for a personal loan.
Step 3: Fees, Interest, and Length
The three most important facets of a personal loan are the fees, interest rate, and length of the loan. These three aspects are directly impacted by your credit score. Therefore, step 1 aids this process if you know you have an above average credit score. The fees may include an origination fee, late payment fee, and pay-by-check fee. Alongside this, the interest rate on your personal loan, if it is high can cause more damage than good to your financial situation.
To ensure the best interest rate, Step 2 of shopping around aids in this process. Learn the lenders that will give you the best possible interest rate for your financial situation. The length, also known as ‘term’ of your personal loan will determine the interest rate of the loan. Keep in mind, that the longer the term the more money you will pay the lender in interest over that period of time.