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Things to Look Out for When Getting a Loan

Taking out a loan for various purposes can be tricky task, but getting a personal loan from an unsecured source can be a rather difficult endeavor if not just risky. As speedy loans are becoming more and more common, so is threat of people falling into a circle of endless debt. Below are listed some of the common traps that unsuspecting people often land into. Look out for these things so that your loan does not cost you more than it’s worth.

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  1. A small one: When you go for a loan and there is an easy availability of it, you end asking for a sum that is greater than what you first thought you wanted. Many a time people lending these sums convince for larger sums and tell that you can pay the interest in small installments over a long period of time. Do not go for it. While paying in small amount over long term might look relaxing to you, it is just their scheme to make more money out of you. Remember that the longer you take to pay back, the larger sum you pay. So, keep your loans as well as your payback time as short as possible.
  2. Fixed rate: Whenever you are out there to get yourself a personal loan, make sure to check out that the rate of interest is fixed. Although, it is usually fixed but there are also places the rate may vary. So make sure you check that out.
  3. Compare the TAR: TAR or the total amount repayable is the sum including the principle sum, interest and any other charges that may be included. This will give an effective idea of how much extra are you paying. People often look for annual percentage rate or APR but that can be easily manipulated by your lender so don’t rely on APR.
  4. T&C matters: While taking out a loan just the sum or low interest is not enough. In case of personal loans, the good thing is that you may find some places where they let you away with any extra charges if you can pay back the loan early. While these terms may not be available at every place, it’s no harm to look out for them. So next time you sign that T&C paper, do make sure you read what it has written.
  5. Check the origination fee: Apart from the TAR, there is often the origination fee that you are supposed to pay along with the interest. Quite often people don’t know about it or forget to take into account. Before getting a loan, make sure to take this into account as well.
  6. Exhaust alternatives: Although the best thing when you want to buy something is by saving up the money first and then spend it, if the situation really calls for a personal loan, look out for any alternatives you might have against getting a personal loan. For example, credit cards for instance, can offer you small loans for a short time. Do not just buy one credit card after another and pile up your debt. Doing so will most certainly land you up in a big problem later on.
  7. Privacy policy: Make sure to read the privacy policy. There could a good chance that your lender might share your personal information with a 3rd party for a good commission.
  8. Check out other banks: Do not just blindly trust your own bank for cheapest loans. While your bank might do many things right, it is quite possible that it does not offer you the cheapest rates for interest or there might be other banks or sources that can offer you a much better price. Look for website which compare such schemes online and then make an informed decision.
  9. Read the ‘add on’ terms: Many a times there are added terms in case you default on an installment. The ‘add on’ terms makes that part of your agreement clear. SO, make sure to read that as well.

Lastly not matter how enticing the speedy loans might look enticing at first, be sure you know the background of things to make a good and informed decision that you not come to regret later on.

This post was written by , posted on July 6, 2016 Wednesday at 8:25 am