Personal Loan Mistakes: Priceless Pointers to Get the Best Terms Possible

With more people than ever applying for personal loans in recent years, it’s clear to see that using credit cards (along with paying credit card interest!) is becoming less popular.

From extravagant purchases to vital home renovations and repairs, there are multiple reasons why people apply for personal loans. Whilst they may seem like a great idea, and often are for most people, it’s common for many to overlook the details of personal loans and end up making big mistakes.

So, if you’re looking at applying for a personal loan and want to ensure you avoid making potentially catastrophic errors, here are some of the most common mistakes to avoid with priceless pointers to help you get the best terms possible!

Not establishing how the interest is calculated

Almost all lenders will differ in terms of their interest rates, so it’s essential to ask how they calculate their interest from the beginning. This way, you won’t get caught out with surprising interest rates you may not have been expecting.

The first thing to do is not go straight to your local bank. Whilst banks may be the most obvious lenders, there are plenty of other loan options available to you – all you need to do is a little research!

To obtain a personal loan, going online and comparing rates is essential to make sure you get the best deal. Then, once you’ve chosen your selected loan plan, asking how interest is calculated right away will guarantee you don’t get caught out with hidden fees.

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Not checking for penalty clauses

Whilst this isn’t always relevant for personal loans, some can contain hidden penalty clauses within the contract if you’re unable to make a repayment.

So, before signing on the dotted line, make sure to ask whether there are any penalty clauses included in your contract and, if so, get an expert to explain exactly what they mean. Loan contracts are often full of jargon and, if you’re applying for the first time, it can be easy to overlook important points. So, to avoid incurring unexpected penalties, make sure you’re in-the-know of any such clauses that might apply to your loan!

Not reading reviews

Like almost everything online, loans and their lenders are subject to customer reviews. In addition to giving you a better idea of what each loan experience will be like, reading reviews will also allow you to compare the array of loans available on a more personal level.

Not reading reviews means you’re in the dark, and the only information regarding loan options you’ll receive is what the lenders tell you. But, by reading about real experiences from real people, you’ll have a greater degree of knowledge to make your decision with.

As people apply for personal loans for a variety of different reasons, every loan experience will be different. But as long as you remain organized and focused the entire way through, you’re almost guaranteed to avoid making silly mistakes that could have costly consequences in the long-run!

Jesse Fin

Jesse worked as a journalist for a large tv station in Korea in her past life. She now works full time at home as a blogger and loves to help her friends manage their personal budgets.

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