Step 1: Know Your Credit Score
To better qualify for a personal loan, it is vital that you make sure your credit score is above what is considered ‘average’, which is 660. Knowing your credit score allows you to look into the most important aspects of your financial background that your loan lender will be looking at. These aspects include any outstanding debt you may have, credit utilization, past bankruptcies or foreclosures, and of course your current income. Once you have become acquainted with these facets, you can better gauge what kind of personal loan you can ask for and the interest rate you may fall under.
Step 2: Shop Around
Shopping around is key when applying for the best personal loan. First, your loan should be focused towards your financial goals, whether it is paying off high interest debt or planning for a wedding. With that said, get to know your financial lender and weed out the lenders with extremely high interest rates.
Most importantly, meet with the lender in person and ask them questions you may be unclear about. Getting to know the lender and financial institution gives insight as to how they treat customers, and what kind of customer service you be will receiving.
Step 3: Fees, Interest, and Term
If your personal loan falls under the wrong hands, you may end up more in debt than when you started. Weeding out financial lenders with extremely high fees aids in the process. However, if your credit score is not the best, you may be subject to high interest and many fees because you are considered more of a risk to the persona loan lender.
If it happens that many of the loan lenders have high fees due to your financial situation, deciding on a loan term may aid when paying the loan off. Keep in mind that, the longer the term is the more you will pay in interest, even though the monthly payment is less than on shorter terms.
Last tip of advice, be weary of loans that say 0% interest rates in the beginning, their interest rate may end up skyrocketing your bills once interest hits on the loan.