Your Lender Options for a Personal Loan

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When you are getting ready to take out a personal loan, you need to choose the right lender. Since there are numerous types of lenders that give out these loans, you need to know what your options are. Choosing the right lender can help you save money and pay off the loan on time so you don’t incur any late fees. If you want to make getting a loan as painless and easy as possible, you will need to keep this information in mind.

Banks

A majority of people go to banks to get personal loans, and there are some things you need to know about this type of lender. A bank is an established financial institution with heavy regulations, so it is a safe choice. One of the drawbacks of choosing a bank as your lender is that it can be difficult to get approved in the first place. Banks typically only give out money to people with good to great credit scores. If your credit history is a bit spotty, you might run into problems.

There are brick-and-mortar banks as well as those that are based solely online. More and more people are getting memberships with online banks because of the convenience they offer. You might want to choose a bank with physical locations that you can visit, just in case the need ever arises. It’s always good to have an actual branch in your area that you can visit if you have any questions or issues you need addressed.

You will need to keep in mind that banks can be bad about dispersing funds in a timely manner. Some people end up waiting a matter of weeks before they receive their funds. If you are really in a hurry, this probably isn’t the very best option. Some banks charge a fee for early repayment, which can be a real pain if you are trying to save yourself money.

Credit Unions

A credit union is a non-profit financial institution with a cooperative structure. A lot of credit unions are fairly small with fewer members than the bigger banks. In this system, members essentially loan each other money, even though the credit union is giving you the funds.

One of the great things about a credit union is that you can get some pretty good deals on personal loans. These financial institutions are known for their low interest rates. You have probably seen credit unions advertise very low rates for loans, but there is a catch. They only need to give those rates to 51% of all applicants who they approve. While it does seem like a sweet deal, there is no guarantee that you will be able to take advantage of it.

If you are looking for a personal loan, you should consider going to a credit union. You might need to become a member before you borrow money though. These places usually let anyone sign up for an account. There are usually no annual membership fees like with banks.

Private Lenders

A private lender is basically an individual or for-profit business that doesn’t operate according to the same rules and regulations as banks or credit unions. These are private lending entities, many of which are based entirely online.

Many people in the UK are going to private lenders to get the money they need, simply because it is so fast and easy. Even people with very low credit scores can get approved through these lenders. There are a lot of them to choose from, so you don’t want to rush into a final decision. You should make a point of researching at least three or four private lenders before deciding which ones to apply to for the loan you need.

The process of getting a private person loan is simple. You will first have to go to the lender’s website and fill out an application. This usually takes several minutes and does require you to submit some personal and financial details about yourself. If you get approved, the funds will be transferred directly into your banking account within 24 hours.

Which Lender Should I Borrow from?

You will need to consider your specific borrowing needs before deciding on a type of lender to borrow from. Banks are good because they are reputable, but it can be tough to get approved. They are also known for being more stringent and less flexible than credit unions and private lenders. A private lender is a particularly good choice if you need money as soon as possible. A bank will usually make you wait at least a week for your funds, and that is after you have already received approval. The more time you spend weighing your options, the easier it will be to make the right choice overall.

Top 7 Mistakes to Avoid When Paying Off a Personal Loan

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There are a number of mistakes that you will need to avoid when paying off a personal loan. When you get this information you will be able to increase your chances of taking care of your debt in a timely manner. The last thing you want to do is be late with paying off your loan, because it can have severe consequences. If you want to keep your credit intact, it is crucial that you read through this article carefully.

  1. Not Having Money Set Aside

If you are going to take out a loan, it is crucial that you have some extra money set aside. You don’t want to struggle with making your payments if you suddenly become unemployed or unable to work for any reason. This money can help you get by with your loan until you are able to start bringing in money again.

  • Taking Out Another Loan

One of the worst things that you could possibly do when paying off one loan is to take out another. You should never try to juggle multiple loans at once, even if you are confident that you can repay them on time. It is always a good idea to play it safe and stick with paying off one loan at a time. This will make it much easier for you to return all of the money you borrow by the due date. While most lenders don’t give out loans to people who already have one, this is still something to keep in mind. It is simply too difficult for most people to handle more than one loan at one time.

  • Not Paying More than the Minimum

You should also avoid paying off paying no more than the minimum on your loans. Even if it is only a £100 loan or smaller.The more you pay with every instalment, the faster you will get your loan taken care of. Just make certain that the lender you are borrowing from won’t charge you for early repayment. This is something that some lenders do, so you should make sure in advance. Spending more on your loan in the short term will save you money overall. The sooner you pay off your loan, the less interest you will end up spending.

  • Not Contacting the Lender if You’re Struggling

If you get to the point where you are struggling to make your monthly loan payments, you should always contact your lender immediately. There is a good chance that they can work with you to come up with a plan. Some lenders give “holidays” to borrowers, where they only have to pay interest on their loan until a certain date. This could be of great help when you don’t have much money coming in to make these payments. Whatever you do, don’t simply ignore your lender in this situation.

  • Spending Money Frivolously

When you are trying to pay off a loan, you shouldn’t be very frugal with how you spend your money. Getting your loan taken care of should be among your top priorities, along with paying your rent or mortgage. If you don’t make this a priority, you are probably going to get behind in your payments very quickly.

  • Not Paying the Loan Back on Time

Don’t think that it is okay to not pay your loan back by the agreed upon due date, because it isn’t. By doing this you will cause your credit to take a pretty big hit, and you will have to pay numerous additional fees. While your lender may be willing to give you an extension, this isn’t something you want to aim for.

  • Not Setting Up Automatic Repayment

Before you finalize your loan, you should tell your lender that you want to set up automatic repayment. This way each loan payment will be taken directly out of your checking account so that you won’t forget to make your payments. This is something that not many people do, and they end up paying the price for it eventually. Automatic repayment could reflect well on your credit report as well. If you want to ensure that you pay off your loan by the due date, you will definitely need to do this.

Final Thoughts

If you are planning on getting a personal loan in the near future, you will need to make a point of considering all of things listed in this article. These mistakes could send you down a really dark path financially and in terms of your credit. The more diligent you are about paying off your loan and doing everything right, the better your chances will be of avoiding disaster. Paying off a loan on time can really improve your credit, which is something that everyone wants in their life.