Five tips for taking out a personal loan
There are many reasons why you may need a personal loan. You might want to consolidate your existing debts, or perhaps you need extra money in an emergency. Whatever the reason, you can help ensure your personal loan application is approved fast with these simple tips.
1. Think outside the Big Four
There are many lenders who offer rates and approval processes that compete with the major banks. Non-bank lenders, mutual banks and credit unions, for example, can offer lower interest rates and faster approval turnarounds – depending on the lender and loan required.
Mutual banks are customer owned, so instead of the stakeholders getting a larger profit, this type of lender gives back to their customers with lower fees, competitive interest rates and support for the community.
2. Got security?
In many cases, you’ll be able to get a lower interest rate and faster loan approval if you can put up security, like a car. This is because the lender assumes more risk with an unsecured personal loan.
3. Research first, apply last
Too many loan applications can actually work against you because it shows up on your credit file. So instead of applying to every lender out there, do your research before making a single loan application to the most suitable lender. Find out what the term of the loan is, the annual interest rate is and what the fees and charges are before choosing a lender.
4. Only take out what you need
Just because a lender can give you $30,000 doesn’t mean you should maximise your credit. You’ll end up paying more interest over the loan term and can even risk getting into a cycle of debt. The solution? Only borrow what you can comfortably repay.
5. Repaying the loan over time
Once you have a loan you will want to start to repay it off. There are many ways to make your payments easier on yourself and being smart with your debts can actually save on fees and interest. These include:
- Syncing your payments with your pay cycle.
- Making payments weekly or fortnightly, rather than monthly.
- Refinancing your loan into your mortgage.
- Making lump sum payments when you have available cash.
With these simple tips, you’ll be on your way to getting the right personal loan and managing it well in no time so you can enjoy life to the full.