There are many reasons why you may consider taking out a personal loan. Personal loans offer a lot of financial versatility since there are no guidelines for using the loan money. While a personal loan may go to any purchase, there are a few common uses. Debt consolidation and financing large purchases such as home improvements are popular reasons to go with a personal loan. Here are three things that you should know before you take out this kind of loan.
It Can Help You Build Credit
The first thing that you should know about a personal loan is that it can help you build credit. Personal loans are installment loans, which means that you borrow a set amount and pay it off in installments over your loan term. With a personal loan, you can establish a track record of on-time payments, something that will help your credit score. Personal loans can also help you get rid of high-interest credit card debt through consolidation. As long as you make on-time payments, personal loans will help you build your credit over time.
Fees May Apply
While most know the impact that interest rates have on a personal loan's affordability, it's essential to know that other fees may apply. Origination fees, prepayment penalties, and service fees can add up. How much you pay in additional fees will vary from one lender to the next. Fees can range from 0 to 8 percent of the value of the loan. When comparison shopping, don't forget to factor in the cost of these fees. Before you agree to a personal loan, make sure you read the fine print and know how much your loan's total cost will be.
How Much You Can Borrow
Another thing to know before you take out a personal loan is that many lenders place caps on how much you can borrow. However, in most cases, you will be able to find a loan that meets your needs. Most lenders have caps between $10,000 and $50,000. However, some lenders have borrowing limits that go up to $100,000. Shopping around and looking into various lenders is the best way to find a personal loan that suits your financial needs.
When it comes to personal loans, here's what you should know before you borrow. First, they can help you build credit. However, you need to make your payments on time for this to happen. There's more to shopping around for a personal loan than finding a favorable interest rate. Make sure to check out what additional info you can learn as other fees may apply, so read the fine print. Finally, many lenders have caps on how much you borrow, so keep this in mind during your search.
Share9 December 2020
When I began my first business selling sports equipment locally, I knew the sports-world well, and I knew how to run a business. One thing I did not know a lot about was the financial world. I had never applied for a loan in my life other than when I financed my car with the dealership in-house financing. My first application at a large bank was denied. I began looking into my other options, and I found that there were more lenders for new businesses than I realized. I applied at local credit unions, local banks, and other business lending services. I was able to secure more funding than I even expected, and my credit is just average. I created this blog to help other new business owners realize that there is funding out there. You just have to find it and apply! Don't give up on your dream.