Posted on: 24 December 2017
Are you in need of some extra money? Have you been considering getting a loan in order to be able to afford a larger purchase? As hard as you may try, it is often impossible to make it through life without taking out at least one loan. Such loans are often for the purposes of buying a house or a vehicle, but there also may be a need for a consumer loan in order to purchase a new large appliance for your home. But before you ever apply for any loan, here are some things you should know or do:
Know your credit score: Unlike a mortgage, consumer loans are often unsecured loans where nothing of value is expected as collateral. This lack of collateral means that your ability to get a favorable loan rests on the lender's belief in your willingness and ability to repay the debt. The better your credit score, the better the loan terms that you will be able to get. Fortunately, there are several reputable sites online that will either allow you to simply get your credit score or that allow you to look at your whole credit report. Monitoring your credit like this will allow you to have an idea as to what sort of loan terms you can expect.
Read the loan terms: It should go without saying but never sign the loan paperwork without knowing exactly what you're agreeing to. Too many people sign the paperwork for consumer loans without realizing how favorable or unfavorable the loan terms actually are. For instance, many consumer loans offer 0% interest for the first year or two as an incentive for you to sign up for the loan in the first place. What you may not realize is that some loans calculate the interest that would be charged during this time and add it to the loan balance if the entire loan isn't paid off during the period of 0% interest. Other loans simply don't charge interest at all for this period of no interest, no matter how long it takes you to pay off the loan.
Pay off early: Another reason to read the terms of consumer loans is to find out whether you are able to pay off the loan early. Some loans may charge you a significant fee for paying off a loan before a specific period of time has elapsed, while others don't care how quickly you pay off the loan in question. The faster you are able to pay off a loan, the better your credit score is likely to be and the better your ability to get another loan in the future, if necessary.Share