Personal Loan Tips

canstockphoto11709602Most everyone has been there sometime or will be in the future, the time when a personal loan will be required for whatever reason you need some extra money. The reasons for a loan are many, they range from people wanting some extra cash for renovations, or perhaps a holiday or really anything. However one should take financial inventory when deciding to take out a loan since you will have to pay it back and even though personal loans are at record lows for the interest they are charging. You still want to be smart in your decisions. The main rule you will want to follow is taking out only what you need and plan on paying it off as quickly as possible. Also keep these other points in mind:

– Treat your loan with respect don’t spend it foolishly since you will be paying it back. While this sounds obvious, studies have shown that people who have a higher respect, for their loan tend to use it wisely, end up paying less interest and default less.

– When borrowing there can be the temptation to pay if off over a longer period of time since the payments are lower however the interest become higher. The money you end up owing will be far greater than if you tried your best to pay it off quickly.

– Use a loan calculator to determine what your payments will be from a financial institution. The previous calculator does not hide anything it lets you know your APR and total payable so there are no hidden surprises.

– Don’t apply at multiple places. Do your due diligence first and determine what you feel is the best place and apply there. Filling out several and just hoping someone approves you can flag your credit report. This will alarm your possible creditors that you are desperate for money or possible even trying to pull some scheme. This will make it less likely for anyone to lend to you. It tells your possible creditors that you may be a high risk recipient.

– Check into Payment Protection Insurance. This essentially covers your payments if you fall ill, injured or lose your job. But don’t just take the lenders first offer, there are independent insurers that may be able to provide this for cheaper or provide a better insurance. But also don’t feel you need to take this either, its your choice and whatever allows you to sleep well at night may be the way to go.

– Look at Secured or Unsecured Options. If you can use security or collateral you can probably obtain the loan for cheaper because it eliminates the creditors risk of you defaulting. On the down side if you are unable to pay your loan back, they can claim your house or car or whatever you put up to back it.