Tips for getting the best personal loan deal

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Date: 13 January 2022

A woman has no money in her wallet and needs a personal loan

A personal loan is an instalment loan that can help you get access to the money you need. You receive the loan amount in a lump sum, and you repay it over a set period. You can use this type of loan for almost anything you want.

Getting a personal loan doesn't have to be expensive. You just need to take the right steps to land the cheapest offers.

The following are tips you can consider for getting the best deals on a personal loan:

Decide how much the loan amount will be

Ask yourself the following questions:

  • Why do you need to borrow money?
  • How much money do you need?
  • How long do you want the loan repayment period to last?

Answering these questions will help you compare loan rates and find out how much lenders will charge you for borrowing your desired loan amount. If you have savings, you can use some of that money to reduce the amount of money you need to borrow. The smaller the loan amount, the smaller the interest repayments will be.

Check your credit history

Your credit history is one of the most significant factors lenders consider when determining if they will lend to you and the interest rate they will offer. If you have a high credit score, you are more likely be be offered a cheaper rate.

If you are considered a high-risk borrower, for example, you have a history of defaulting on your loan payments, your loan deal will carry a higher Annual Percentage Rate (APR). Such loans are created for borrowers with poor credit scores. However, some lenders can and will offer a cheap interest rate even with a bad credit score. You can check out CreditNinja interest rates and other similar sites to know more about them.

You should check your credit score before applying for a personal loan to find out if you qualify for a cheap loans. Check your credit ratings online for free through the following UK credit reference agencies:

  • Experian
  • Equifax
  • TransUnion

Checking your current credit standing can help you ensure there are no mistakes in the credit reports that adversely impact your credit score. It also helps you get an idea of what you can expect when applying for a loan. If you have a poor credit score, you can boost your credit score before applying for a personal loan.

Shop around

Don't forget to compare the loan options available on the market when applying for a personal loan. It's the best way to find the right deal for you and your current financial situation.

Consider the total loan cost and interest fees for any loans you are considering from all lending institutions in the market. You can easily do this by using a comparison site.

Get pre-qualified

Getting pre-qualified by multiple lenders can increase your chances of getting the best loan option. This method can give you a glimpse of the likely deals you will be offered once your loan application is approved. Moreover, getting pre-qualified doesn't usually impact your credit score. Most lending institutions only make soft credit checks during the pre-qualification process.

During a soft credit check, a lender looks at your credit history and makes a tentative decision about how much money you can borrow, and whether your loan application is likely to be approved.

The pre-qualification process will feel like an official loan process. That's because you will be required to provide basic personal information such as monthly debts, income, employer's information, etc. However, it does not automatically result in an official loan application approval.

Look closely at the fees

Personal loans tend to have several different types of associated fees. Make sure you know what they are, when they are payable and how much they will be as they can add considerably to the amount you repay so do your research.

The most common loan fees are the following:

  • Late payment fee
  • Non-sufficient fund (NSF) fee
  • Cheque processing fee
  • Annual fee

To wrap up

You can take out a personal loan for almost any purpose. However, loan rates and amounts will vary by lenders. So, follow these tips for getting the best deals on a personal loan so you can bag the best personal loan deal.

Copyright 2022. Article was made possible by site supporter Tiffany Wagner.

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