What You Should Know Before Applying for a Personal Loan
Being strapped for cash can be frustrating, especially during this pandemic. The good news is that whether you require extra cash to buy new equipment for your work-from-home setup or pay for home improvement expenses, you can have easy access to the money you need by getting a personal loan. For your convenience, use this article as your guide to learn more about this financing option and what you should know before applying.
What Is a Personal Loan?
A personal loan is a type of installment loan that provides you with a fixed amount of money ranging from 1,000-50,000 dollars, and you can repay it between one and ten years. Since it is usually unsecured, you don’t have to risk your home or other assets and use it as collateral to secure funds. It also has lower interest rates and higher borrowing limits than other loans. Best of all, it can be used for almost anything, depending on the restrictions imposed by your lender.
What Are the Red Flags to Watch Out for When applying for a Personal Loan?
While a personal loan is typically an affordable way to borrow money, note that not all of them are created equal. Some have very unfavorable terms offered by unscrupulous lenders. To protect yourself from the stress and hassle of securing a loan that you end up regretting, here are some big red flags that you have to watch out for when applying for a personal loan:
High origination fees
An origination fee is an upfront fee that lenders charge to cover the cost of loan processing. It is also known as administrative, underwriting, or processing fee. Some reputable lenders charge a small origination fee, while many lenders don’t charge this fee.
If you are required to pay a large origination fee, consider this a red flag, especially if you are only going for a small sum. This fee will make your interest rate very high, and you may have a difficult time paying back your loan. It’s best to steer clear and look for another lender.
Short repayment timeline
A short repayment timeline requires you to pay back the loan within just a few weeks or months. As a result, you may not be able to afford to make the payments. This could encourage you to borrow again and further damage your credit score. Worse, it could eventually trap you in a cycle of debt as you take out loans repeatedly.
High prepayment penalties
Most of the time, paying off your debt before the deadline is a fulfilling experience because it frees you from debt. It means you have improved purchasing power and increased your savings. The problem is some lenders penalize you for doing this, even when you just aim to be a responsible borrower and want to get out of debt as soon as possible. Therefore, avoid personal loans with high prepayment penalties at all costs.
How Do I Find a Trusted Personal Loan Lender?
The key to finding a personal loan lender you can trust is looking for one with the most reasonable rate and fees. You also have to consider their qualifying requirements, terms and conditions, loan repayment periods, and time to funding. If you are searching for a reputable loan place in Murfreesboro, consider reaching out to us.
Personal loans can be an ideal way to secure the funds you need. However, some unethical lenders take advantage of borrowers by offering loans with disadvantageous terms. When applying for a personal loan, protect yourself from falling victim by remembering this information and finding a trustworthy lender like us.
Stones River Credit is a trusted installment loan company in Murfreesboro. We offer a variety of personal loans that fit your needs. Rest assured that there are no hidden fees. Contact us today at 615-896-5006 for more information.