How to Compare Personal Loans and Find the Best
Whether you need to cover medical bills, pay school fees, or finance any of your day-to-day needs, a personal loan can be one of the best solutions to deal with your financial difficulties. However, getting a personal loan should never be taken lightly. This type of loan will work differently from other types of credit. It is important for you to compare personal loan rates and all other features offered by loan providers. By comparing some loan options available, you can ensure that you can get the best one for your needs. In this article, we are going to discuss some important details that you need to consider when choosing a good personal loan.
a. Check the type of loan
When you look in the market, you can find several types of loans that are available today. The most common loans are unsecured personal loans and secured personal loans. With the unsecured personal loan, you do not need to have collateral or collateral to get the loan. However, this loan has a higher interest rate and fees than the secured personal loan. On the contrary, the secured personal loan requires you to provide collateral before you can take out a loan.
b. Check the rate
This is another important thing you need to consider. You need to know if the loan has a fixed or adjustable rate. The fixed rate loan will have the same interest rate for the remainder of the loan term. Some people prefer to have this type of loan because they can manage their budget easily. You can expect to have the same interest rate until you repay the loan. Another type of interest rate is variable rate or floating rate. When you take out a variable rate loan, the rate changes over the term of the loan.
Mikka Montero, financial reporter for AllTheBestLoans, in his research indicates that the interest rate is important for 50% of Filipino borrowers.
vs. term of the loan
When you take out a loan, you need to consider the term of the loan. Each approved loan will require you to choose the loan term that you will repay the loan plus interest. Paying off your loan earlier than the loan term will save you from long payment delays. However, some loan providers will require you to pay prepayment charges that you need to consider before taking out a personal loan. You must choose the right loan term that will suit your financial situation, whether it is 12 or 60 months.
D. Monthly plan and also annual percentage rate (APR)
When you make regular monthly repayments, you repay the principal plus interest or fees each month. Interest will be passed on to the monthly flat rate. This will be a key factor you need to consider, especially when planning your budget strategy. You need to understand how the annual percentage rate or APR works. It will calculate the interest rate, your cash repayment and also the term of the loan. It is strictly regulated in the Philippines and is commonly used to calculate the amount of a loan you can take out.
e. Monthly repayment amount
This is another important thing you need to consider before taking out a personal loan. This is a number that can represent the amount of money you are willing to pay each month under the repayment plan. When choosing the right monthly repayment amount, you might be tempted to opt for the shorter and less expensive loan. However, you also need to consider your monthly income and expenses, especially if you want to avoid having trouble paying your loan.
F. Total Refund Amount
When comparing certain personal loans, you should check the total repayment amount with different loan providers. This amount will be calculated from many different factors, including the total interest, principal, and also the total processing fees for your loan. This number will give you an idea of the overall fees and costs for your loan. By looking at this amount, you will know which loan will be expensive or affordable depending on your needs. You should pay close attention to this number when comparing some personal loans available.