Updated: Dec 24, 2021
When it comes to personal loans, affordability should be the top priority. If a lender offers an incredible annual percentage rate, they're probably your best bet.
But more than one good offer makes choosing tricky. You need to weigh the pros and cons, including discounts, funding time, and payment flexibility.
Here are features you need to look for in a personal loan:
1. Flexible Repayment
Making timely payments is essential, but you might need to adjust your repayment schedule every once in a while. If you have a large family to provide for, you might need to pay off your loan faster.
If you want to start a business or go back to school, you might need to stretch out your repayment. When you want a little more flexibility, you need a loan that lets you restructure your monthly payments.
Most personal loans allow you to change your repayment schedule. You can increase or decrease the amount you pay or change its frequency. You can make bi-weekly, weekly, or lump-sum payments. It all depends on the lender and the type of loan.
2. No Penalties
Even if you make your payments on time, you still have to pay interest on your personal loan. If you miss a payment or make one early, your interest rate will increase. If you're late, your credit score will be impacted.
To avoid these penalties, you need a lender who doesn't charge any default fees and will let you skip a payment now and then.
3. Affordable Rates
A few factors determine the interest rate on a personal loan. First, you should look at the annual percentage rate. A lower APR means a lower interest rate.
You should also mention the minimum and maximum repayment amounts. The higher the minimum, the lower the interest rate. The lower the maximum, the higher your interest rate.
Finally, look at the allocation ratio. If the lender gives you more money than you asked for, they will charge you a higher interest rate.
You should also look at the repayment period. You can get a significantly lower interest rate if you pay your loan in full in one year rather than over three years.
4. Flexible Loan Term
Some lenders won't give you more money than you ask for. If you need more, you have to ask for a personal loan refinance.
Others will give you more money than you need. If you pay them back in full, your interest rate will be lower. However, if you finance the extra cash, your interest rate will be higher.
You also need to consider the repayment period. The shorter the term, the lower the interest rate. The longer the term, the lower the payment.
The minimum repayment period is usually three months. If you want to lower your interest rate, pay off the loan in less.
Personal loan financing is a great way to start your business or pay for your education. But if you don't look into the details, you could end up paying too much for your loans. Look for a flexible repayment schedule, adjustable interest rates, and a short repayment period to get the most out of your loan.
Calhoun Finance Company has served the greater Anniston/Oxford area since 2000. We are not a payday loan company, nor are we a vehicle or title lender. We provide services to people in need of loans, regardless of their financial situation. We believe you can’t always judge a book by its cover when it comes to past credit, and we will never turn any applicant away. If you need a personal loan in Anniston, AL, please call to inquire today.