Factors to Consider When Choosing Personal Loans
Posted On September 15, 2021 · Length of read: 2 minutes
Wondering what factors other than rate should you consider before choosing a personal loan online? There are so many options to consider with personal loans that it can be easy to get overwhelmed. If you’re wise, a quick glance at the Annual Percentage Rates (APRs) can help you eliminate a few choices offhand. But how do you choose between the loan offers that are left?
When choosing the right personal loan, you should weigh important factors, such as what is the benefit of obtaining a personal loan and the size of the loan. The loan amount you’re offered is key because that is the cash that’s going to help you accomplish your goal. Other crucial factors to consider when shopping for a personal loan include:
- Annual Percentage Rate
- Ease of application
- Clarity of terms
- Prepayment penalty
How Do Personal Loans Work?
A personal loan is a lump sum of cash that you can borrow for many reasons. Some of those reasons include consolidating debt such as medical bills, making home improvements and paying off high-interest credit cards.
When you choose a personal loan, you agree to pay the borrowed money back in monthly installments at a specified APR. Personal loans can be granted as either secured or unsecured, although many personal loans are unsecured.
An unsecured loan, which is harder to get, is not linked to collateral. With a secured loan, you’ll need collateral, such as a savings or investment account. Then if you don’t make your payments, the lender could take possession of your collateral.
If you have decent credit and provable income, you may be able to obtain a personal loan, according to Business Insider. Approval for personal loans is typically faster than approval for auto or home loans, according to Experian and you may be able to receive the funds as fast as one business day depending on the lender.
What To Look for in a Personal Loan
Whether you’re looking for large or small personal loans, you’ll want to know how much you can borrow and how much you will have to pay back. It’s also important to determine whether you are allowed to make extra payments and if there are any other costs, such as origination fees or prepayment penalties.
Another Key Factor to Consider
Another key factor to consider with personal loans is the ease of application. While this may not seem like a dollars-and-cents issue, ease of application can speak volumes about the professionalism of a loan company. Quick personal loans with transparent terms can set your mind at ease because you’ll understand exactly what you signed up for.
What’s the Benefit of a Personal Loan?
People take out personal loans for a variety of reasons. For people with credit card debt, a personal loan could be used to consolidate credit card bills into one monthly payment. In that way, a person could work their way out of debt by organizing their bills and possibly lowering their interest rates.
Personal loans can also help people accomplish other goals such as renovating their home or paying off medical bills. If your goal is well thought out and you make your payments on time, among other factors, a personal loan may help move you away from debt and in the direction of financial stability.
Explore Your Personal Loan Factors and Options
Splash Financial works with a variety of lenders that offer personal loans. The application process is fast and the loan terms are transparent. If you are interested in a personal loan, click the link below to explore your options through Splash.
The information provided in this blog post is not intended to provide legal, financial or tax advice. We recommend consulting with a financial adviser before making a major financial decision.