What to look for in a personal loan
Searching for a personal loan can be a mine field, especially if you’re a personal loan newbie. With a bunch of lenders, financial jargon to translate, and different criteria to navigate, it can be hard to know where to start.
Personal loan interest rate
An interest rate is the percentage of a loan which is charged by the lender on top of the loan amount.
Getting a personal loan isn’t like buying off the supermarket shelves, since interest rates are calculated on an individual basis. There are a number of factors that influence your interest rate, including your credit rating and whether the loan is secured. Since a low credit suggests higher risk to a lender, a higher credit score can secure you a lower interest rate.
While interest rate is important, remember it isn’t everything when it comes to calculating the overall cost of a loan. You’ll also need to factor in fees, charges, and the term (or length) of loan.
You might want to choose a fixed interest rate, meaning your repayments will be the same throughout the loan.
Fees and charges
Fees and charges also impact the cost of a loan, so it’s worth taking these into account. The most common fees associated with personal loans are establishment fees, monthly service fees and early repayment fees.
When you’re dealing with your hard earned money, it’s important to work with a trustworthy lender. A friendly team and an easy process can go a long way. Before you go ahead with a loan, you can check them out on Trustpilot.
A loan you can afford
A responsible lender will also only offer a loan you are likely able to afford, after assessing your financial situation. Of course it’s always a good idea for the customer to decide how much will be affordable for them. Consider income, expenses, other debt, personal circumstances and any future costs. Applying for a loan may not be the best option if you are currently suffering financial hardship, or are likely to suffer financial hardship in the near future.