3 Personal Loan Mistakes to Avoid When Applying
Personal loans are pretty common among Americans thanks to their flexibility and lower qualification requirements. If you have an unexpected expense or major purchase, you might be exploring personal loans as an option. If it’s your first time applying for personal loan funding, you’ll want to avoid these common personal loan mistakes.
1. Not having realistic expectations.
Lenders make approval decisions based on varying criteria, but your credit score has a lot to do with if you will get approved and for how much. Your income also plays a role in how much you can borrow. If you have a poor credit score and low income, you shouldn’t expect to borrow a high dollar amount with the best rates.
Knowing where you stand as a potential borrower is important because not all lenders work with all types of borrowers. In fact, many won’t lend to consumers with low credit scores. At Uprova.com, we work with borrowers with varying financial backgrounds, so you have a higher chance of getting approved than with some lenders. Check your credit score before you apply for funding to understand where you stand as a borrower.
2. Not comparing lenders.
Comparison shopping is a great way to secure a deal on everything from TVs to jeans. It’s also a great way to save on loans. Shop around with different lenders to see what rates and terms they offer to secure the best loan for your needs.
One lender may approve you for a higher dollar amount, while another may offer a more competitive rate. Consider what is more important to you, then go with the lender that meets what you’re looking for. You can compare rates online. Check your rate for free at Uprova.com without impacting your FICO credit score.
3. Not considering your budget.
Before accepting a personal loan agreement, figure out if your monthly loan payment will fit into your budget. If you’re applying for a personal loan, you probably know how much money you want to borrow, but are you sure you can afford the monthly payments that would come with borrowing that amount?
Personal loans come with fixed monthly payments, making budgeting easier. You will be charged interest on top of your loan. Make sure you can afford your loan before signing your loan agreement.
If you fail to make timely personal loan payments, you could suffer negative financial consequences. Missing personal loan payments could lead to lenders reporting you to the credit bureaus and a subsequent drop in your credit score. A low credit score can make it very difficult to borrow money in the future.
Personal loans are flexible and are quick and easy to apply for. However, not all borrowers are treated equally. If you have a good credit score and high income, you can expect to get approved for higher amounts and earn competitive rates. However, if you have a poor credit score and low income, it can be harder to get approved.
It’s important to shop around and compare lenders to ensure you’re getting the best rate or terms. Before you accept a loan, make sure you can afford your monthly loan payments to avoid missing payments and impacting your credit score.
If you need personal loan funding up to $5,000 check your rate at Uprova.com today.