In general, personal loans can be either secured or unsecured, and they’re loans borrowed for personal use. With a personal loan, defaulting can affect your credit score, so it’s important to select a loan that you can comfortably repay.
However, not all lenders offer the best consumer loans. To avoid costly personal loans, evaluate these key features of any loan offer:
Annual Percentage Rate (APR)
APR is the main factor that determines the cost of your personal loan. The APR can vary depending on the lender and your credit score (usually, a lower credit score means a higher APR). The APR includes the interest rate, as well as other fees included in your personal loan. Some lenders may offer a lower interest rate but higher fees, including origination, Underwriting, credit check, and repayment fees. Checking the APR is the best way to compare different loan offers.
Personal Loans Eligibility
Different lenders have varied eligibility requirements, which means you may qualify for a loan with one lender, and get denied by a similar lender. Besides the minimum eligibility requirements, different lenders can offer different interest rates based on your credit score. For this reason, you can benefit from selecting a lender with the best offer.
Loan Term Offered by Lenders
The loan term includes the repayment period and monthly repayment amounts. Usually, a longer loan term means lower monthly repayment amounts. This can help you to comfortably repay your loan without over stretching your monthly budget.
Convenience for Personal Loan Borrowers
Online lenders are typically more convenient than brick and mortar stores. You can manage the entire process at home, from loan application to repayment. This is convenient for people working from home or those who need financing urgently.