There are many reasons people take out a personal loan. It may be for an emergency, like unexpected medical bills or housing repairs after a natural disaster. Debt consolidation — such as paying off multiple credit cards with high-interest rates — is also a common use for personal loans. Or perhaps you have a large purchase, such as paying for a wedding venue and services for your big day, that you need to finance upfront. Whatever the reasons, if you plan to take out a personal loan, here are five tips to help you choose the right one.
- Consider The Repayment Time Frame
Depending on the amount of your loan, you can choose a repayment plan anywhere from two months to five years or more. It depends on the lender. MaxLend for example offers up to ten months to pay back a loan, while other lenders offer differing repayment timeframes.
- Consider The Interest Rates For The Loan
Most personal loans work without collateral — also known as unsecured loans — so you aren’t leveraging your bank account or your house. Instead, a personal loan is a fixed monetary amount that you repay over a specific length of time, from months to years, and you agree to a fixed interest rate for the duration of the loan repayment. How much interest you pay on the loan depends on the lender and your credit score when applying for the loan.
- Consider Any Additional Requirements
Each lender will have specific requirements. Almost all lenders require the lender to be 18 years or older. Maxlend requirements, like other lenders, stipulate that you must have a verifiable income source and a U.S. bank checking account for which to deposit the funds and repay the loan over time.
- Consider If You Need A Cosigner
If you have a lower credit score, have filed for bankruptcy, or have yet to establish your own credit history, you may find it more difficult to secure a personal loan based on these factors. But don’t give up! A cosigner with good credit can immensely help your chances of securing a good personal loan. Whether this is a spouse, a parent, a partner, or someone else you know well, a cosigner agrees to accept the responsibility of repaying the loan at the agreed terms.
- Consider All Your Options Before You Sign
Just like with any large purchase or financial decision, the first option you see — or are offered — may not always be the best one for you, personally. Don’t be afraid to shop around and compare offers and lenders. Your individual circumstances are important to consider, and taking out a personal loan is a big decision. Be sure to carefully read the terms and conditions of any personal loan. You will want to know if there are penalties for late or partial payments and if there are any hidden fees for using a lender’s services.
A personal loan can be a great solution for your needs, so shop wisely — reading reviews on different lenders is also a great source of information and can help you choose the right loan for you.