Personal loan shopping is done by most of us at some point in time or another, but what should we look out for when doing so?
By: Hitesh Khan/
Personal loans can be a godsend when you face a huge medical bill, an unexpected repair bill, or another large expense. But you might be wondering if a personal loan is even possible if you have had the misfortune of having bad credit.
But personal loan shopping requires you to ask 5 important questions:
- What is the annual percentage rate (APR)? Looking at the APR can help you size up different loan packages that may be quoted. The APR is the true cost of borrowing money and can include fees and other costs beyond interest charges. It’s important to understand what types of costs can factor into the APR.
- What types of fees are involved? You may have to pay fees for the application, credit check, loan origination or other charges. Make sure you get all this information up front when personal loan shopping and comparing loan packages in order to make an informed decision about borrowing money.
- Is there a penalty for paying a personal loan off early? This is a particularly important question if you plan to use a loan to consolidate debt. Paying off a loan early can free up more of your income, but get all the facts about whether you will pay a penalty so you can factor that into a debt reduction strategy.
- How does your credit score affect loan quotes? Borrowers rarely receive the low interest rates quoted in ads unless they have excellent credit. Make sure you are getting the correct information that applies to your financial situation when you are personal loan shopping and before deciding to go through with a loan.
- What type of customer service does a lender offer? Are you applying for an online loan where you never meet a representative of the lender face-to-face? Do you plan to set up meetings at different lenders so you can have a more personal interaction? If you are already a customer of a bank or a member of a credit cooperative over the years, you may have built up some kind of relationship with employees, which might help when applying for a loan. Make sure you choose a lender that is compatible with your wants and needs.
When personal loan shopping, take time to evaluate different lenders and loan packages.
This will help you make the best decision about borrowing money. If several lenders refuse to loan you money or offer very high interest rates, you may need to put off borrowing money until you clean up your credit.
- Work with the lender. You may wish to make payment arrangements with the lender, such as offering to repay the principal amount of the loan.
- Cancel GIRO agreements. You can notify your bank that you wish to cancel any GIRO that lets the payday lender debit your bank account. Notify your bank within four days prior to the deduction date and also notify the lender in writing that you have revoked their authorisation to withdraw funds from your bank account.
- Close the account. If the lender continues to try to draw funds from your account you may have to ask the bank for a permanent closing of the account. (But be sure to open a new account at a different bank before you close the old account.
- Stop debt collectors. You can ask that efforts by the payday lender or a debt collector to collect on the loan stop. If the lender or collection agency harasses you can take a court order against them under the Protection from Harassment Act.
- Look elsewhere. Alternatives to payday loans include small savings accounts; salary advances from your employer; working out an extended payment plan with your creditor; loans from friends, relatives, and social service agencies. Also, some credit cooperatives may offer low interest, short-term loans with quick approval that are a much better option than payday loans. Other options that are more expensive than a credit cooperative loan but better than a payday loan are a credit card advance.
How to Secure Personal Loans Quickly
If you are in a financial crunch and are searching if personal loans useful to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.
If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.
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