Applying for online personal loans is a serious matter that involves your commitment to repay it back over a certain period. You want to make sure that you have been attentive to every detail in the process of searching for the right loan before putting down your signature on the agreement. The following are 3 tips prior to applying the online personal loan.
1. Check Your Credit Rating
Firstly, you must check your credit rating by requesting a free credit report from the credit bureau. The credit score is one of the factors used in determining how much interest rate you will get charged. With a good credit score, the interest rate will usually be around 6 – 10%. If you have an average credit score, you can expect to pay a more expensive interest fee.
By knowing your credit score, you can easily select the right lender with the online loans comparison search engine as they will state the minimum credit score requirement. This prevents your loan application from being rejected. It is important to choose an online lender that reports all your payments to the credit bureau so that your credit score can build up as you continue to make the repayment.
2. Check for the Fees
Secondly, you must check for the late fee and penalty APR so that you can calculate how much it is going to cost you when you are late in making payment. Many online lenders charge origination fees which are automatically deducted from the loan amount. As a rule of thumb, you should avoid lenders that offer cheap interest fees but high origination fees. The fine print will let you know all the fees that you are liable to pay for. You can also call and ask the lender to tell you about the fees you are responsible in paying.
3. Make Sure You Have Enough Income and Hold a Stable Job
Thirdly, before applying, make sure you have sufficient income from a stable job. Many lenders have minimum income requirement so be sure to check with the lender on this. The lender cannot approve your loan if you are not earning enough to cover the loan repayment after deducting the expenses. Having a stable job means you have been holding the same job for at least 6 months or more.
If you have been changing job frequently in the recent months, the lender may reject your application. If your income is insufficient, you may be able to work out for a lower repayment by talking to the lender. Most lenders will understand your difficult financial situations and help you to arrange for a repayment plan with a low monthly amount that you can afford.