Not every personal loan lender you come across is legit. Some are fraudulent providers looking to acquire your personal details for malicious uses. In addition, even the genuine lenders differ in terms of the loan terms and customer support they offer. The rise of online personal loans has resulted in a limitless number of providers, making it hard to pick the right one.
However, when you know what to look for in a personal loan provider, selecting the one that resonates with your needs and requirements becomes easier. Discussed below are five tips for choosing a personal loan lender.
Look at the loan options
Personal loans can be secured or unsecured. Secured personal loans are usually low-interest and require you to provide collateral, meaning if you don’t repay, the lender may repossess your assets. Unsecured personal loans are the most common as they don’t involve any collateral, and you can spend the cash on anything you want. Their interest rates are normally higher than for secured loans. However, their repayment terms are more flexible. Other lenders may provide payday loans, including Superb Cash Advance, which are meant for short-term borrowing. Analyzing these options enables you to find a personal loan provider suitable for your financial needs.
Check the eligibility criteria
While most personal loan lenders have specific requirements that you should meet to qualify for a loan, their standards may be different. For instance, several providers may look at your credit score to determine your eligibility, but some might need higher credit scores than others. The common personal loan requirements lenders may consider include:
- Income: You should be able to prove that you have a reliable income source, as lenders want borrowers who can repay whatever they borrow
- Credit score: A high credit score raises your possibility of getting approved for a loan
- DTI (debt-to-income) ratio: A low DTI is a sign that your income can pay back your personal loan, which makes you attractive providers
Checking eligibility criteria before applying for a personal loan helps narrow your lender choices to those suitable for your credit profile.
Compare interest rates
Personal loan lenders charge varying interest rates, with some charging exorbitant rates. Comparing different lenders’ interest rates before proceeding with your loan application is essential. It helps you find a lender offering reasonable rates. You should also look at how the lenders calculate their interest rates, as the method they use influences the cost of your loan. Opt for lenders that use the reducing balance method because it reflects the loan’s actual cost more accurately.
Consider the personal loan amount
People take personal loans to cater to specific financial needs. Also, different lenders provide varying loan amount ranges. As such, you should have a set loan amount that can cater to your needs. The right personal loan lender should offer an amount equivalent to or close to how much you wish to borrow. This eliminates the risk of taking multiple personal loans, which can be costly and inconvenient.
Check the processing time
Checking processing time is crucial, especially when you need a personal loan urgently. Some personal loan lenders provide instant loans that are disbursed within minutes. Others can take a few hours or several days. Choose a provider based on how quickly you need the funds.
Finding a personal loan provider who resonates with your needs isn’t easy. However, applying these tips when choosing a personal loan lender can be helpful.