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Mike Reilly

1 year ago

Rainy Day Loans: 3 Tips to Find the Perfect Loan for You

There comes a time in everyone’s lives when money is tight. Whether you are experiencing long-term unemployment, mounting debts, or a medical emergency—a personal loan can quickly solve your problem. But it can also complicate your financial state for years to come. This thorough guide will teach you in three simple steps how to apply for a loan that fits your needs, and ways to set it up in a way that would be easy to pay off.

The majority of people have taken loans at some point in their lives. Our hectic lives require unexpected expenses-—expenses which we cannot foresee and, more often than not, cannot afford. According to a survey conducted by the New York Federal Reserve, one in three Americans said they would not be able to come up with $2,000 to cover an unexpected medical bill or high-interest credit card debt.

A personal loan is the best way to deal with such issues, as long as the loan terms and conditions are optimal and do not work against the borrower. Many financial institutions offer personal loans, and their requirements vary from lender to lender. Without research, loanees can find themselves enslaved to a 20-year monthly payment that just keeps growing with time.

Doing your homework before applying for a loan is crucial, but what happens when you’re stressed and don’t have time to waste on hours of internet research?

Simple! Follow this three-step guide to finding the perfect loan and solve your liquidity problem in less than 24 hours.

Let’s go:

Tip #1: Where to Start Looking for a Personal Loan
The first rule of thumb is: Never accept the first offer given to you. Even if it seems perfect, get at least three quotes before you commit to a lender.

But how to get a variety of offers that will help you in your consideration process? You have four valid options:

Try Your Bank
It’s the best place to start. Your bank already deals with your finance. They know your credit score, income, and assets. Call them now and check what types of loans they can offer.

Google it
There are endless resources on personal loans on the internet. Take two hours to browse the web, find information about loans you may qualify for, and write the details in a table.

Don’t just rely on lenders’ websites. Read online reviews on services like TrustPilot, Credit Karma, and personal blogs.

A few nonprofit organizations can direct you to trustworthy financial institutions and alert you about loan scammers. It’s also advised to do a background check on your chosen lender at the Consumer Financial Protection Bureau’s database. This website holds all the complaints people have filed against banks and loan providers.

Don’t just rely on lenders’ websites. Read online reviews on services like TrustPilot, Credit Karma, and personal blogs.

Ask friends and family
Experience is the best teacher. The people around you had good and bad experiences with lenders, and their knowledge is priceless.

Advise with people you trust, get recommendations, do your own research, and use their referrals to get better rates and terms.

Tip #2: What to Look for When Shopping for a Personal Loan
The loan you take today can affect your financial state for years to come. Choose a lender that gives you bad terms, and you can shackle yourself to a 20-year loan pay-off that you can’t work into your daily life.

Here are the essential factors you need to take into consideration when applying for a loan:

Interest Rate
The interest rate is the percentage of the loan a lender charges you. It is typically noted on an annual basis.

The loan interest rate is the most significant factor that influences your monthly installment, so it’s crucial to get the best rate possible. If your credit score is high, you qualify for lower interest rates. However, the loan market is a market like any other. Bargaining for better interest rates is possible and even relatively easy.

Repayment Term
Personal loans can usually be repaid in 12 to 84 months, depending on your lender. A shorter repayment term means a lower interest rate. However, the shorter the term is – the higher your monthly installments are.

If you apply for a long-term loan payoff, your payments will be lower, and your interest rate is higher. Choose according to your monthly income and financial state.
You can get a fee-free loan in some cases. But, when you take a loan, you may have to pay one of these fee types:

  • Late-payment fee: Check if the lender charges for delay in monthly payments and, if so, how much.
  • Pre-payment penalty: If you decide to pay off your loan earlier than the agreed-upon term, it can cost you more. Check if your lender charges Pre-payment penalties and try negotiating the terms if you can.
  • Origination fee: Some lenders—typically the major ones—charge compensation for processing your loan application. It’s usually 0.5% to 1% of the loan amount. Reducing the origination fee is possible, but will most likely result in increasing the interest rate.

Some lenders charge compensation for processing your loan application. It’s usually 0.5% to 1% of the loan amount.

Tip #3: How to Choose the Best Lender
There are more factors to consider when applying for a loan than the terms the company can offer.

Here are the factors you should examine when looking at lenders:

  • Reputation: Is the lender known for its excellent customer service? Is the business ethical? Did the company undergo any major lawsuits or financial crises?
  • Location: Even though social distancing these days eliminates the ability to visit your lender’s local branch or offices as often, being proximate to the company is of importance.
  • Innovation: Being able to access your account via mobile app is super important if you want to be on top of your financial situation.

Here are red flags to look out for when choosing your personal-loan lender:

  • They only communicate via phone: If they do not have physical offices, you can visit or do not send contracts for review via email – don’t commit to anything.
  • They’re not registered in your state: Call your state attorney general’s office and check if the lender is registered. If not, they shouldn’t have offered their services to you in the first place.
  • They ask you to transfer funds to an individual: A loan wire transfer must be submitted to a company, not a specific person. If there’s no company name accompanied by LTD, LLC, etc. – it’s a scam.
  • They ignore your credit score: A lender MUST check your viability for a loan. If they disregard your credit score and assure you they will loan you the money in any case – beware!

In Conclusion: Take a Loan the Smart Way
Applying for a personal loan usually happens in times of need and must be completed relatively fast. But this doesn’t mean it should add more stress to your life.

Follow our 3-step guide, implement all the tips above, and you can rest assured that your decisions are well supported.

This way, you can simplify your financial situation, enables you to make needed purchases, and enjoy terms you can pay off and live with.

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