For people living in Memphis, Tennessee, the option to take out a personal loan seems like a smart and secure decision. A personal loan can be looked at as a sigh of relief to debt you need to pay off, medical expenses, or potential financial emergencies. More so, they can be used for weddings, planning a vacation, and basically, anytime you need cash. However, without proper education, taking out a personal loan can be harmful than anything. Let us look at the aspects of a personal loan you need to be aware about.
Your Credit Score
In Memphis, the average credit score according to creditcardlocal.com is 682, which is below the national average. With that said, your credit score is single-handedly the most important aspect when it comes to applying for a personal loan. The reason for this is that for a lender to better get to know your financial background, they must pull your credit score from one or all three credit bureaus, Equifax, Experian, and TransUnion.
Your credit score will show the lender if you have any late payments, if you have a high credit utilization rate, and what your financial history looks like. In any case, the higher the credit score, the better. Alongside your credit score, a lender will look at your debt to income ratio.
Your debt-to-income ratio is a percentage determined by how much debt you pay monthly compared to your monthly income. The loan lender will average out your percentage and give you an estimate of what you may be approved for. When it comes to debt-to-income ratio, the lower the debt the better chances you will have to be approved for a lender with low interest rates.
Shop Around for The Best Lender
Once you have considered your financial background and know your credit score as well as your debt-to-income, it is time to shop around for a lender you know may give you the loan amount you are looking for. There are numerus lenders depending on your credit score bracket that you can research. Most importantly, ensure the credit lender is secure and has plenty of reviews. Whether it is a private lender, bank, or credit union, these questions will help during the process.
- Is my loan secure or non-secured?
- What is my origination fee?
- How much does the interest rate total with the loan?
- What is the length of the loan?
- What fees are there if I am late, pay ahead of time, or pay by check?
- Is there a repayment holiday?
- Is it a fixed interest rate or non-fixed?