Instalment loans are said to be a safe alternative, but this does not mean you go and sign the dotted lines without doing research or asking the right questions. It does not matter, if you want to go on a weekend vacation or plan to consolidate your credit card debt, it is crucial to understand the personal instalment loan terms.
Questions to ask the personal loan lender
What is the loan pre-stated terms?
Before you visit LoanPigUSA for submitting loan application first decide whether you will be able to pay off the borrowed money every time without any default. On LoanPig, you will get many licensed lenders making it convenient for you to shop for suitable terms and compare. The loan amount gets divided across lengthy period.
Before signing read the terms. If it says, borrower need to repay the full loan amount along with interest within a couple of weeks then you must be able to do it. If you cannot or have doubt that you will default then look for another lender with more flexible repayment time length.
What interest rate is offered?
In general, loan interest is included in the amount they loan. However, some determine the interest rate on the basis of credit score or loan amount. Better credit score means less rate you need to pay.
It is important to find the interest rate as it represents the total cost you spend on the borrowing of funds. High interest rate means you end up paying more. It is wise to look for co-signer option to lock low interest rate or consider improving your credit score prior submitting loan application.
Compare the loans costs using Annual Percentage Rate or APR? It gives an idea of the total loan cost including interest and fees, so you get to know how much the monthly instalment will be and if you are able to pay it or not.
Do you charge pre-payment fees?
Penalties are applied, even if loans are paid-off early because it cannot be profitable for the lender. It is the interest applied on the loan amount that fund them. The longer the repayment duration the more money borrower has to pay. However, all the lenders don’t structure their terms in this way, so make sure of any kinds of pre-payment fees before you sign the loan documents.
Prepayment penalties are not legal and are rarely used but it is important to know in advance, so that you don’t get surprised if you try to pay off early.
Is collateral necessary?
Collateral needs will depend on the kind of loan you choose. In secured type of loan, borrowers need some kind of security asset for the borrowed funds. Collateral can be a home or a car or some other valuable property in their possession. Collateral gives the lender an assurance that their money is not at risk because if the borrower cannot repay then the asset can be used as payoff for the owed debts.