Between mortgages, car loans and department store cards, nearly every American has borrowed money at one time.
The federal U.S. government is indebted to private lenders and other countries to the tune of 15 million dollars. States owe each other and their citizens in the form of bonds. If you need a personal loan to help you with education, an emergency, medical expenses and more, you have lots of company.
Since the loan will be amortized or spread out over years, every point of interest saved helps. When considering a personal loan, make sure you don’t make the following common mistakes:
- Applying only at your bank or your neighborhood banks. Both credit unions and online banks offer lower rates and better terms because they spend far less on marketing, human labor and overhead. Many of their processes are automated. All those saved costs allow them to offer lower personal loan interest rates.
- Not knowing eligibility terms and incurring dings to credit. Every loan officer must check an applicant’s credit during the approval process. If you apply for loans that require excellent credit score when you only have a fair credit score, you won’t get the loan and your credit score will be impacted. Some people apply for so many loans that they ruin their chances of applying for anything!
- Agreeing to the first loan terms offered. Most loan officers have some wiggle room on interest rates and terms. It’s important to at least attempt to get the numbers more in your favor to increase the chances that you’ll be able to repay on time.
- Borrowing Money You Can’t Pay Back. Asking for more than what you really need can get you into trouble. The interest on the extra builds up, raising payments and interest in a self–perpetuating cycle.
- Rushing through the fine print in the contract. To avoid late payment penalties that could swell the principle, make sure you know the loan’s terms:
- Amount of interest
- Maximum debt
- Penalties for skipping payments
- Penalties for late payments
- Length of loan