There are many options for personal loans. Here’s how to make the right choice.
Of course, it’s wise to not spend money you don’t have, but many of us find it difficult to confine our purchases to just the money we earn each month. Whether it’s to cover a major purchase or emergency expense, many things can fall outside of your typical budget. Many people reach a point in their life, if not multiple times, where they need a personal loan. There were 5.73 million loan originations in Q4 of 2021 alone.
While it can be tempting to go with the first lender that comes up in your online search, especially when you’re in a financial emergency, you will be better off if you take the time to find the right personal loan for you. When shopping for a personal loan, consider the following:
- Lender practices
- Payment terms
- Payment fees
Read on to gather more tips around finding the right personal loan for your financial situation.
When looking for the right personal loan for your financial situation, pay attention to the APR. The APR takes into account the full cost of a loan over the course of a year. This includes the interest rate, origination fees, and other finance charges, if applicable. For that reason, a personal loan with a lower APR is ideal. Your credit score often plays a key role in determining your APR. The better your FICO credit score, the better APR you can obtain. Compare APRs to secure the best loan for your credit score.
You want to choose a lender that is clear and transparent about their lending practices. In other words, you don’t want any surprises. Working with a lender who is upfront with their fees and lending terms will help you plan and budget for timely repayment. At Uprova.com, you will review your loan terms before you provide your e-signature and secure the loan. Make sure that the loan terms are agreeable before you sign any loan document.
There are different types of personal loans with varying term lengths. Short-term loans typically have high APRs and short repayment terms. You could have to pay back your entire loan plus fees in two weeks. Personal and installment loans have longer payment terms that require biweekly or monthly payments spread out over a longer period of time. Choosing the right personal loan for you requires understanding your lender’s payment terms and if they work for your purposes.
Find out if the lender charges prepayment penalties. A prepayment penalty is when a lender charges a fee if the borrower pays off their loan balance before the repayment due date. As a borrower, it’s beneficial if you repay your personal loan early to reduce what you will pay in interest and overall, so it’s important to check whether your lender charges a prepayment penalty. You will also want to understand your lender’s late payment policy is.
Personal loan lenders can offer different APRs, abide by different practices, may offer different term lengths, or charge different fees. It’s important to compare lenders and loan offers to find the right personal loan for your financial needs.
If you are in need of funding fast, Uprova can help. At Uprova.com, you can request a loan up to $5,000 online in minutes, and if approved, receive funds in as soon as one business day. Learn more about our loan options now.