Check Your Rate
1. Interest Rates Are Going Up
At the end of 2015, the Federal Reserve initiated a much anticipated hike in the federal funds rate. What this means for borrowers is that taking on debt is going to be more expensive going forward. That means that the personal loan rates you’re seeing now could be a lot higher six or nine months from now. If you’re planning on borrowing, it might be a good idea to scope out loan offers sooner rather than later.
2. Online Lenders Likely Have the Best Deals
The online lending marketplace has exploded in recent years. With an online lender, there are fewer overhead costs involved, which translates to fewer fees and lower rates for borrowers.
With a lower interest rate, more money will stay in your pocket in the long run. Lending Club, for example, claims that their customers have interest rates that are 33% lower, on average, after consolidating their debt or paying off credit cards using a personal loan.
3. Your Credit Matters
Regardless of whether you go through a brick-and-mortar bank or an online lender, you likely won’t have access to the best rates if you don’t have a great credit score. In the worst case scenario, you could be denied a personal loan altogether.
You can check your credit score for free on our site. And each year, you have a chance to get a free credit report from Experian, Equifax and TransUnion. If you haven’t pulled yours in a while, now might be a good time to take a look.
As you review your report, it’s important to make sure that all of your account information is being reported properly. If you see a paid account that’s still showing a balance, for example, or a collection account you don’t recognize, you’ll need to dispute those items with the credit bureau that’s reporting the information.
4. Personal Loan Scams Are Common
As more and more lenders enter the personal loan arena, the opportunity for scammers to cash in on unsuspecting victims also increases. If you’re applying for a loan online, it’s best to be careful about who you give your personal information to.
Some of the signs that may indicate that a personal loan agreement is actually a scam include lenders who use overly pushy sales tactics to get you to commit or ask you to put up a deposit as a guarantee against the loan. If you come across a lender who doesn’t seem concerned about checking your credit or tells you they can give you a loan without doing any paperwork, those are big red flags that the lender may not be legit.
5. Not Reading the Fine Print Could Cost You
Before you sign off on a personal loan, it’s best to take time to read over the details of the loan agreement. Something as simple as paying one date late could trigger a fee or cause a higher penalty rate to kick in, which would make the loan more expensive in the long run.
Photo credit: Raghuvanshi,
Rebecca has been writing about the nuts and bolts of personal finance since 2009. Her work has appeared on a number of popular finance sites, including the Quickbooks/Intuit small business blog and Money Crashers. As a homeschooling mom of two, she's always looking for ways to make the most of every dollar.
A free Debt Management Plan (DMP) helps people who are struggling to meet their unsecured debt commitments, such as credit cards, personal loans and overdrafts, or people who are paying these in preference to their priority costs, such as mortgage/rent, HP agreements, food and utility bills.
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The Hebrew Free Loan Association of Houston was formed in 1932, a time of financial turmoil for both the country and the Houston Jewish community. During the Great Depression, the overwhelming need for a free loan society in Houston was met through the efforts of presidents Ben Hurwitz, Louis Rosenberg, Abe Sampson and Abe Silverman...