Questions to ask Lenders before Committing to a Personal Loan
Personal loans are those that can be used for a variety of uses including vehicles, home repairs, vacations, education, and many more endless possibilities. Personal loans can be obtained from banks, financial investors, and other lending institutions including those found on the internet. It can be confusing to decide who to conduct business with. There are some questions you need to ask potential lenders before making any type of commitment on a personal loan.
First, it is important for you to understand that as a customer or potential customer, you have the legal right to ask lenders questions. Do not conduct business with any lender who is willing to answer your questions in detail. Be wary of lenders who tell you not to worry about the details or who try to rush you through the process. Both of these should be red flag indicators that something isn’t right. Quality lenders who have nothing to hide are more than happy to answer any questions you have about personal loans.
Too often, customers are hesitant to ask questions out of fear that the lender will look down on them or that they will be wasting the lenders time. As a consumer, you need to prepare yourself with the proper information to make informed decisions. This is very important in the area of your finances.
If it is not clearly stated, find out the maximum amount the lender offers for personal loans. This way you can find out if the lender will even be able to meet your needs based on the amount of money you are looking for. Next, ask questions about the personal loan terms. This will help you determine if the payment is going to fit your monthly budget.
Most personal loans are decided within just a few days. Ask the lender what verifications you will need to provide as well as how soon they can have a decision after you provide all the necessary documentation. The verifications will vary but should include ID, income, tax returns, and a completed loan application.
Many personal loan lenders will push the loan rate at you, especially if they are offering one that is lower than the competition. However, you should ask them to show you exactly how much the loan is going to cost you. Lenders can give you an itemization of all fees of the loan. You will want the information to compare with other lenders information.
Don’t forget to ask the lender about prepayment. If possible, you will want to pay your loan off early to save on interest you pay over the life of the loan. Some lenders will charge you a payment for prepayment. If you plan to pay the loan off sooner than it matures, then do not work with a lender who requires prepayment penalties as part of the personal loan offer.
With security issues being so huge in our society, inquire how the lender will be using and securing your personal information. You want their guarantee that your name and personal information won’t be sold to other solicitors. If they do, expect to start getting telemarketing calls and lots of pre-approval offers in the mail. Most lenders will use encryption and a firewall for their computer storage of your personal information, but ask about it anyway. It is also a good idea to ask them how they inform customers if they feel security has been breached. Good lenders have such plans in place for your protection.
Taking the opportunity to ask questions from potential lenders before making a commitment to a personal loan takes time and effort. However, you will be glad you did. It is important that consumers arm themselves with the best possible information as this is the only way to make important decisions based on having the proper knowledge. I can’t tell you how many people have learned the hard way that asking questions makes a world of difference when it comes to financial issues.