4 Ways to Get the Best out of a Personal Loan

You may need to apply for a personal loan to satisfy an urgent financial need, or to finance a project or a car purchase. Despite the reason, you need to bear in mind how you will sort your future spending to repay the loan without defaulting on payments or going through any financial problems.

When it comes to applying for a personal loan there are several things to consider including interest rate, processing fees, loan term, number of installments and more. You need to pay attention to these details to get a good deal on your personal loan. So, in this article, we are going to introduce few tips on how to the best out of a personal loan:

Dig Deep

You may have applied for a loan with any bank and got an initial approval. But have you tried to compare interest rates, fees and terms offered by different banks and lenders before taking this deal?

Take a look at the market; explore different interest rates and loan terms to make sure you covered all the possibilities and landed on the best deal out there.

And if you have a pre-existing bank you choose to handle your different financial needs, check with them first, as they may have some competitive rates and terms depending on your previous relationship with them.

Compare at least 3 to 5 lenders to cover all available choices and getting the terms you desire.

Maintain a Good Credit Score

Your credit score is one of the main things a lender will examine when you apply for a personal loan. It plays a great role in determining the terms of your personal loan deal, so if you are planning to get a loan then you need to start working on your score beforehand. A rating above 700 is considered a good one in the UAE.

You can enhance your credit score by working on paying any debts or liabilities you have. Keeping your utilization ratio within the advised limits is also another way to grant you a good credit score.

Consider Secured Loans

When looking for banks and lenders to apply for a personal loan try to find ones that offer secured loans. With this type of loan, you will provide collateral, e.g., a car, property, or cash in a savings account.

Secured loans come with lower risk for the lender. In case you default on payments the bank will use the offered collateral to cover payments. Looking at this, secured loans have a lower interest rate compared to secured ones, which means you’ll get a better deal.

So, if you have a solid plan that will help you to keep up with the payments without risking the loss of your collateral; why not leverage secured loans’ lower interest rates?

Shorter Payment Period

Longer payment periods mean the lenders are taking higher risks, which will result in a higher interest rate. If you look at the rates you will notice a difference between loans with 2 to 3 years term and loans with 5 to 6 years term for example.

Check your income and make a repayment budget to see if you can handle a shorter period. If you can, then why miss on the lower rate.

Final Thoughts

Some may choose to pay attention to interest rate when applying for a personal loan. But to get the best out of your personal loan you need to follow a comprehensive approach, make sure to consider the processing fees, prepayment charges, etc. Don’t rush your decision, take time to look at all the available options, and plan an initial budget, before picking your final deal.

 

 

Author: Web Spangle

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