5 Features To Look For In A Personal Loan Beyond Rate
5 Features To Look For In A Personal Loan Beyond Rate
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Interest rates are only one piece of the puzzle when choosing a personal loan. Here are 5 more features to look for to save money and frustration.

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When comparing personal loans, it’s important to weigh the interest rate because choosing between a variable or fixed rate or securing your loan can leave you with more money in your pocket by the time you’ve repaid the loan. ready.

While interest rates are a good indicator of how much you can expect to pay, they’re certainly not the only thing you should be looking at. With that in mind, here are 5 features to look for in a personal loan beyond the rate.

Calculate your fees

Fees for personal loans come in all shapes and sizes. Some are ad hoc, others are ongoing, but all can add up. The most common to watch out for are:

Administration fees. Also called processing fees, these fees cover the costs of processing your application. They are usually billed once you have been approved for the loan. You can expect to pay between $150 and $600, but you may be able to waive this fee through negotiations or special offers.

Account maintenance fees. These can be called monthly or annual fees. Simply put, these are ongoing costs that you will pay monthly or annually. Although they may seem like a fraction of the total cost, they can add up. A monthly fee of $10 on a loan term of 5 years would come with a price tag of $600.

Prepayment/breakage fee. Making extra payments or prepaying your loan can save you money by reducing your interest due. Some lenders have fees associated with prepayments, so make sure the benefits outweigh the cost.

You may encounter fees that are not on this list, so make sure you understand your loan before signing. At a glance, the comparison rate is a good indication of the true cost of a loan. It takes into account both the interest and fees of a standard loan, although your cost differs depending on how different it is from the selected standard loan. For best results, use a personal loan calculator.

Consider your loan term and flexible payment options

The length of your loan will have a noticeable impact on the amount you pay monthly and the overall amount you will pay. Do you want a shorter duration? This means higher monthly repayments, but you pay them off faster. Do you prefer a longer duration? This allows for more affordable monthly repayments at the cost of paying more interest overall.

The faster you repay a particular loan, the less interest you will have to pay overall. For this reason, you may want to look for a lender that allows prepayments so you can spend extra money on your debt whenever you can afford it.

Hunt for promotions and special offers

Lenders sometimes promote a loan by offering discounts, waived fees, or a signing bonus. Keep an eye out for these offers, as they often only last for a limited time.

Some lenders also offer bundles and will waive fees or offer discounted rates if you are a member of their organization or use their other products and services.

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Compare non-bank options

These days, you’re limiting yourself if you only look at what the big banks offer. Peer-to-peer lenders, neobanks, and credit unions can offer competitive alternatives to bank loans.

Peer-to-peer lenders facilitate a platform where investors fund a portfolio of personal loans and earn interest on what they lend, while borrowers receive an individual rate based on their credit score.

Neobanks are digital-first or digital-only banking platforms or apps that promise lower fees, easy access, and a seamless experience. They generally promote lower fees than traditional banks.

Credit unions offer the same services as banks, but have a smaller, though still significant, market share. For example people’s choice has nearly 400,000 members and manages nearly $10 billion in assets. Credit unions also differ from banks in that they are owned by their members. This means that the profits are reinvested in the company, its products and, ultimately, its members.

Consider their customer service

A personal loan is an important decision that you are committed to for years to come. You can save yourself a lot of headaches by checking customer service reviews. Check if their customer service is online or in a call center rather than having physical branches. It is important to trust your lender in order to be sure to get the best offer and to be well advised.

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