When shopping for a loan, there are many things you should look for when choosing the right lender to provide your needs. The following are the things to check in order to select the perfect lender.
Interest rate. Of course, one of the major deciding factors when choosing a lender is the interest rate. Generally, you’re likely to spend less with loans of lower APR. Still the interest face value is just one of the many aspects to check.
It also pays to know if the interest rate remains the same or is bound to change over time. Typically, you’re better off with an interest that stays the same so you’ll know exactly how much to pay in every instalment, helping you in budgeting your finances accordingly.
Payment scheme. Another crucial factor to look into is the payment scheme. This includes the duration and the scheduling of your instalments. Of course, you want the repayments arranged at the most convenient time for you. It could also be easier for you if payments can be set up automatically.
Also make sure that the loan amount is payable within a reasonable span of time. It makes no sense to choose a short term loan when you know that you’ll struggle with repayments. Likewise, while it can be very tempting to extend the duration of your loan, it is simply not cost effective. Despite the low monthly payments, you’ll be committed to the loan for a much longer period of time and you’ll spend more as well.
Hidden charges. Many unscrupulous lenders may trap you into complicated jargons, and if you’re not careful, you’ll end up in an agreement that continuously stresses you out with surprise charges and hidden costs. To avoid this, make sure to read and understand the credit agreement before signing it. Keep in mind that lenders should abide by a strict Code of Practice and report anyone who executes unlawful ways to take money from you.
Early repayment fees. You should also check the company’s policy about early repayments. Ideally, you’d want to settle off the loan balance as soon as you can afford it to save more cash and free yourself from the contract the soonest time possible. Unfortunately, many providers may charge a fee for paying off the balance earlier than the specified date. Still, there are those who will allow you to do it without extra costs, so it pays to choose that company.
Policy on missed payments. We can never predict what will happen in the future, and while you see yourself right now eligible and financially capable of repaying the loan you’re applying for, a sudden life event can quickly change everything. If times get tough, you need to ensure that you will receive the appropriate help you need. Inquire about how the company handles missed payments. A responsible lender will try its best to help their borrowers in the best way that they can, even during financial difficulties. They should be able to accommodate your concerns and cut you some slack during unexpected circumstances. A good company will always attempt to come up with a suitable arrangement before resorting to court action, as long as you are cooperative with them. Beware of companies that force people to sell their properties or employ unscrupulous ways to collect payments.
Reputation. Make sure that the company is committed to responsible lending. The provider should perform the necessary affordability checks to determine if one is truly eligible for the said loan. Furthermore, the company should practice honesty and integrity at all times. All applicable rates should be disclosed to you from the very beginning. Your lender should also take the initiative to make the loan process as seamless and pain free as possible.