Always ask to see the total amount you’ll pay over the lifetime of the loan
These loans aren’t secured against any of your assets or possessions, meaning if you default on your payments, the lender can’t take any property from you because it wasn’t specifically named as collateral
- Understand your interest rate – Interest rates are another big variable. Two people could apply for the same loan amount, from the same company, and come out with two completely different interest rates. Lenders factor in individual circumstances for every loan. The higher the risk they think you are, the higher the interest you’ll pay.
This will give you a good idea of how much interest you’ll actually be paying. If it’s too high, shop around for a better rate.
These loans aren’t secured against any of your assets or possessions, meaning if you default on your payments, the lender can’t take any property from you because it wasn’t specifically named as collateral
- Early repayment penalties – The longer you take to pay off your loan, the more interest a lender makes on it. Lenders don’t want you paying off your loan early and many will have early repayment clauses written into the loan contract.
You should always try to pay down your debts as quickly as possible, so check with your lender to see if they’ll penalize you for doing so. Again, any reputable lender should make these charges very clear from the outset.
These loans aren’t secured against any of your assets or possessions, meaning if you default on your payments, the lender can’t take any property from you because it wasn’t specifically named as collateral
- Payday loan risks – These types of third-party lenders will loan you money on the promise of a portion of your next paycheck. The interest rates are incredibly high and if you’re unable to make the payments you can get trapped in a cycle of debt. Only take this type of loan if you’re absolutely certain you’ll be able to make the repayments.
- Be careful in giving your personal details away – When a loan company is comparing your best loan options it might be necessary for them to give out your personal details to different providers. This can lead to many unwanted marketing calls and emails from loan companies, each trying to pressure you into signing on the dotted line.
Make sure you’re clear on the marketing practices of the provider you’re going with. Any decent provider will let you choose your .
These loans aren’t secured against any of your assets or possessions, meaning if you default on your payments, the lender can’t take any property from you because it wasn’t specifically named as collateral
- Make sure you can make the payments – Of course, always plan ahead and ensure you can actually pay off the amount you borrow. While the lender will check your circumstances, never be dishonest in the amount you can pay back.
Any missed payments can affect your credit rating and risk trapping you into a cycle of debt you’ll be unable to repay.
Personal loans are still incredibly useful when used the right way, something that millions of Americans can attest to. Just make sure your eyes are open and you’re aware of the risks going in.
There are two types of personal loans you can apply for, secured and unsecured. Before deciding on which s right for you, it’ll help to understand these in more detail:
With a secured loan, you make a promise to give up a chosen asset in the event you can’t repay the loan. This could include things like http://yourloansllc.com/personal-loans-ne your car, promise of money in a savings account or a certificate of deposit.
These are a lower risk for the lender as they’re pretty much guaranteed to get their money back one way or another. They can be useful for borrowers as secured loans usually come with lower interest rates.
These work well for those with low credit ratings too, and a good way for you to build credit. Many lenders will be happy to discuss secured loan options with you. Of course, though, if you don’t pay, you’ll lose the assets you’ve nominated.
