People sometimes rush into filling out a personal loan application without completing their homework first. And this is akin to starting from the roof when constructing a house. When looking for a personal loan, we often focus on quick fixes that aren't always the best option for their situation. Pay close attention to these three blunders before submitting your personal loan application - and avoid them at all costs. Take your time and do things correctly.
Mistake 1: Only comparing costs
While pricing is an important consideration when choosing a lender, it should not be the only one. Customer service and reputation are both critical. If you want a smooth experience, do your homework on the lending institution before submitting your application. Allow the opinions of other customers to influence your decision. Many lenders charge an origination fee for processing loan applications, so making sure the connection is a good fit before submitting your application might help you save money.
In the long run, the time spent researching a variety of lending institutions will save you money and stress. Compare current interest rates and lenders to find the best deal for you:
Mistake 2: Overlooking your credit score
Before you apply for a personal loan, think about how important your credit score is. If you don't do your study and select the right lender for your needs and financial situation, your credit score might end up costing you thousands of dollars in finance expenses.
One of the most crucial factors that lenders check when evaluating your personal loan application is your credit score. If your credit score is higher, your interest rate will be lower. As a result, if you have bad credit, certain lenders will be a better financial fit for you than others. Many lending institutions have minimal credit requirements, so do your research before completing an application.
Every loan is awarded an A1 through E5 grade based on the borrower's personal loan application and credit report at Lending Club, a powerhouse in the online personal lending arena situated in San Francisco. The rate of interest ranges from 5.32 percent to 26.30 percent. For a $15,000 personal loan, a borrower with an A1 credit score will pay $798 in interest, while an E5 credit score borrower will spend $3,945 in interest. The distinction is significant.
Mistake 3: Fudging your financial information
You probably want to present yourself in the best possible light while working on your application. However, you should consider twice before stretching the truth. It is against the law to lie on a personal loan application. Your loan application will be declined at the the least, but lying on your application is deemed fraud and can result in jail time. Avoid inflating your earnings in the hopes of receiving a better deal.
For lying on his personal loan application, a West Virginia man was sentenced to prison and a year of supervised release in 2015. He claimed a monthly income of $29,000, although he only made a fraction of that — $2,833.33 per month, to be precise. While this is an extreme case, it demonstrates that lying on your application in order to increase your salary is not worth the risk.
Make sure you're being entirely honest before submitting your personal loan application, and don't be afraid to search around for a lender who can meet your needs.
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