Applying for a personal loan is an important financial process to do correctly, and without haste. Most people get loans to help them make big purchases or to cover some unexpected costs for a variety of reasons. Personal loans usually last over the course of a year or more, so they can be rather costly to deal with if dealt with improperly. Thus, it’s vital for prospective borrowers to understand how to compare personal loans. When a borrower takes the time to compare personal loans, they always win in the end. Plus, as more borrowers learn about the importance of ensuring they compare loans, more lenders are realising that they have to be more competitive and offer much better deals on loans. So comparing loans benefits everyone.
Comparing Personal Loans are like shopping for Shoes.
For most of us, finding the right personal loan can be a similar experience to finding a great pair of shoes - some look good, whilst others just don’t. When you go shopping for the perfect pair, you know what type you’re looking for to suit your lifestyle. You know what you can afford, what colour and brand you prefer, and how long you’d like them to last in general to get your money’s worth. Thus, you’ve got a few decisive factors. Similarly, loan comparison is a key element of the loan acquisition process. Some of the specifications are the same - for instance, you need to find a loan that suits your lifestyle, budget and personal needs - much like when you’re searching for those new shoes.
5 Things Fincheck uses to Compare Personal Loans:
Loan Amount (Minimum)
Ever thought why there’s a minimum amount you can borrow? Well, the core problem is that the high cost of originating and servicing a loan is no smaller for a small loan than for a larger one. This is why lenders fix a minimum amount you can borrow to make it worth their while.
Loan Amount (Maximum)
To keep borrowers in tune with responsible borrowing practices, most lenders cap the maximum amount you can borrow. This should be self-evident to you as lenders don’t deal with irresponsible borrowers seeking astronomical amounts for a reason. People need to keep themselves accountable for not borrowing more than needed.
This is the minimum timeframe in which you can make your loan repayments. Similar to the minimum loan amount, lenders want to lend you money, to make more money. The more interest they can get, the better for them. So lenders set a minimum repayment period to make it worth their while. Always remember to look for early settlement penalties when applying for a personal loan so you don’t get caught by any nasty surprises when your ship comes in and you’d like to settle your loan amount in a once-off fashion.
This is the maximum timeframe in which you can make your loan repayments, any longer and you’d be heavily penalized. Make sure you honour your loan agreement and pay your debt within the allocated period.
The Annual Percentage Rate of Change (APR), is the cost per year of borrowing expressed as a percentage number that represents the actual yearly cost over the term of the loan. By law, all financial institutions must show customers the APR of a loan. The APR is not only the interest rate on the loan, but includes closing costs, origination fees, and insurance fees, which are typically wrapped into the loan. For example, if two loans had the same interest rate, but the one had much higher fees, one wouldn’t get an accurate comparison of the loan’s true cost by only looking at the interest rate. This is why we look at the APR, to get a more accurate estimate.
The Key Takeaway
If a person feels they have explored all their options, they usually go ahead with a smile. So, do your part and compare personal loans before applying for just any. Only then can you be sure you’ve found the best deal possible and feel good about your choice, knowing that you’re not wasting money on a high-priced loan. This is what Fincheck is all about, providing you with a quality platform to compare personal loans so that you get the best deal possible!