3 Red Flags to Avoid When Applying for a Personal Loan
Plans can go astray and when life gets even more complicated — whether you have to deal with emergencies or kickstart a business venture — ensuring you’re financially capable of dealing with these events is crucial.
Unfortunately, not everyone has the financial means to pay for surprises in life. However, personal loans give people the opportunity to overcome monetary challenges at an affordable rate than other loan options.
It’s understandable how many people who are strapped for cash want to rush the loan application process, but moving forward without shopping for lenders can lead you deeper into financial trouble.
Remember that not all lenders are legitimate, and some may masquerade a scam as an attractive, low-interest personal loan to catch you off guard. Before you fall into this money pit, consider the list below to help you distinguish fair loan offers from frauds:
Warning Sign #1: The Repayment Timeline Is Too Good to Be True
The thought of a shorter repayment period seems better since it means you can get out of your dues faster, but keep in mind that the quicker the repayment plan, the higher the amount you have to pay to make up for the short terms.
These often describe payday loans, and it’s one of the biggest reasons it’s regarded as the most dangerous form of debt, particularly since it traps people into a cycle since they may not have the means to pay off everything in one fell swoop.
Warning Sign #2: You Need to Pay Origination Fees
Most licensed lenders don’t ask for origination fees, and the few established lending companies typically only charge a small percentage. But when the lender asks for an amount that takes a large sum out of your loan amount, then it’s best to look for a different lender since larger fees will also skyrocket your interest rates in the long run.
Similarly, stay away from lenders that ask for money as insurance or collateral, especially when it involves providing sensitive information about your personal details.
Warning Sign #3: If Lenders Don’t Review Your Credit History
Your credit history is an integral metric that allows lenders to measure your risk as a borrower, so they will always need to review your credit score to see if you’re financially sound enough to be eligible for a personal loan.
If they skimp this part of the process and fail to ask for your credit history report, it’s time to run for the hills and look for more reputable lenders in town.
The Bottom Line: Ensure Your Personal Loan Application Is Legitimate and Secured by Licensed Lenders
Working with a trustworthy personal loan lender is crucial, especially since they can be a silver lining during a financial crisis. Falling into the trap of loan scams can only push you into debt, so hopefully, the list of red flags above should steer you in the right direction when shopping for the best lenders near your area.
How Can We Help You With Your Financial Troubles?
When you’re short on funds, Calhoun Finance Company is there to help cover your needs with our same-day loans ranging from $202.00 to $1491.00. We fully commit to simplify the loan application process for our clients in Anniston and offer clear repayment plans so you can overcome your dues when you’re stuck in a bind.
Keep in mind that we specialize in personal loans to offer an extensive range of loan sizes that suit varying needs. Call us today at 256-236-8885 and see what we can do to help you obtain an affordable payment plan!