A personal loan can help you check off many goals. Since it comes with no stringent conditions attached, the funds you borrow through this channel can be used for a variety of requirements. You could consolidate your debts, take that dream vacation, purchase the premium gadget you’ve been eyeing, or even pay off huge medical bills. Whatever your reason for availing a personal loan may be, it’s important to consider a few key factors before you zero in on a lender.
If you are in the market for a personal loan, here are some things you should think of in order to make the right choice.
What are the interest rates like?
This is one of the first things you will need to think of when you are out shopping for a good personal loan. Interest rates depend on the amount you borrow and the credit history you present. Since these rates are not set in stone, it’s important to do a little bit of research and get a fair idea of the interest rate you will be charged.
If you would like to make the job easier, Lendela will help you find offers from multiple lenders, so that you can assess the different options before you select the personal loan that is the most affordable or / and suitable for you.
Are there any additional fees and charges?
Interest isn’t the only fee that is charged on your borrowing. Loans in Singapore come with other charges attached – for instance, some lenders charge annual fees in addition to the interest you pay each year. Others may levy late payment charges for instalments that are not repaid on time.
Take a while and look into the additional charges, if any, associated with the offers from the lenders you have shortlisted. This way, you can better estimate the overall cost of borrowing funds through a personal loan.
Is the lender legitimate?
Loan scams have been on the rise for quite some time now and with the COVID-19 crisis catapulting most processes to online platforms, many illegitimate lenders have flooded the market. To avoid falling prey to lending scams, it’s best to ensure that the lender you’re considering borrowing from is a legitimate, registered entity.
There are certain telltale signs that indicate that a lender may not be genuine, like a lack of clear contact details, unnaturally high processing fees, and certain clauses in the offer like automatic approval. Look for these and do your research before you decide on an offer.
How much money can you borrow through?
Get to know your borrowing limit. Again, your credit score plays a key role in determining how much banks and other lenders are willing to lend you. But over and above that, your income also influences your borrowing limit. It’s a good idea to look into this metric and ensure that you plan your finances carefully.
Understanding how much money you can borrow gives you a better look at whether your funds will be sufficient to achieve the purpose you wish to apply them for. If you are looking at estimates, it’s always smarter to adopt a conservative approach, so that you don’t overestimate your borrowing limit.
Can you afford the EMIs (Equated Monthly Instalments)?
Sure, the lender can get a good look at your credit score and assess your income before deciding on whether you are a good borrower. However, nobody knows your finances better than you. What fixed expenses do you have to take care of? Is your income enough to cover your necessities and still help you repay the loan promptly?
Delayed repayment could not only result in additional penalties, but it also brings down your credit score. So, you will need to think this over and ensure that your repayment isn’t adversely impacted in any manner.
Is early repayment possible?
As a borrower, you may assume that early repayment is a good thing, since you are actually ensuring that the lender gets their money back sooner, but from the lender’s perspective, it means that since you will be repaying your dues earlier than planned, they will be losing out on the interest for the remaining period.
So, many lenders charge a fee for early repayment, so they can offset the interest lost to a certain extent, at least. Look out for these charges before you avail a loan, so you know the terms and conditions involved.
How does the loan impact your credit score?
Lastly, before you sign the dotted line, you need to pay heed to how the loan you are availing impacts your credit score. Borrowing a reasonable amount of funds and repaying them as per schedule impacts your score positively. However, exceeding your credit limit or delaying your repayments may adversely affect your credit history. It’s a smart idea to keep this in mind when you go in to avail a loan.
Being smart about these things can help you find the right offer for your requirements. If you feel overwhelmed about the number of parameters to compare and assess, Lendela is always around to make the job much easier for you. With Lendela, you apply for a personal loan for free, receive multiple offers without any obligations, compare your options and select the best loan – all online with the support of our experienced Customer Relationship Team. Easy, right?