Applying for a personal cash loan can be rather daunting, especially if it is your first time doing so. With so many lenders available, as well as online, it can get a little confusing to know who the best company to deal with is and who will provide the best rate and service. Instead of going in blindfolded, there are a number of questions you can ask beforehand to really get a grip on whether you have found the right lender or not.
1. Can I afford the repayments?
It goes without saying that if you’re getting a personal cash loan, you should be able to pay it back. It’s also important to note that you will be paying back more than what you initially borrowed, and this amount depends on the interest rate that is applied to the loan. Have a solid understanding of the repayments that will be required and the frequency (monthly, fortnightly, weekly, etc). You will need to ensure that you can afford the loan before applying.
2. What is the policy on refinancing?
You should find out what the company’s policy is on refinancing the loan. Not all loan companies are the same and the one you choose today might be great, but a better deal may come along down the track at some point. Some lenders will have rather high fees for refinancing before the term of your loan and this may outweigh any benefits of the new loan you wish to apply for. Knowing and understanding any cancellation or termination fees up front will save you a headache later on.
3. Will I be eligible for a loan if I receive a Government pension?
The answer to this question varies widely depending on who you ask. Some lenders will be more than happy to approve applicants whose income relies solely on a Government benefit or pension, while others require you to be working full-time, no matter what. Ask your potential lender about their approval requirements and whether you will be eligible for a loan with them. Knowing and understanding what they will and will not approve will help you to determine if they’re the right lender for you.
4. What are the associated fees?
Not all lenders are the same and this applies to any associated fees as well. Application fees, monthly fees and repayment requirements vary greatly depending on the lender. This is a very important aspect to consider when looking for a personal loan. There are some lenders that will charge a substantial application fee, as well as a large monthly fee that can really add up over a year or two. Find out how much the lender is going to charge you before making an application.
5. What happens if I default on a payment?
Missing a payment or having a late payment can cause some issues, depending on how the lender chooses to deal with these kinds of situations. Some companies will be relatively strict on defaults and will look at recovering the debt through a collections agency rather quickly. Others can be slightly more lenient in the event of personal circumstances. Check with the lender on what their company policy is to ensure that you are satisfied with their policy and requirements should you default on a payment at some time.
6. Is this a secured loan?
Generally, there are two types of loans; secured and unsecured loans. Depending on the type of loan, you may have to secure assets to the loan in order to qualify. For example, a secured car loan means that the car you are getting a loan for will be secured to the loan and in the event that you cannot repay the loan, the car may be sold in order to pay back the loan. Even when applying for a personal loan (which are generally unsecured loan types), it is always best to check first.
7. Can I pay the loan off early?
You may think that you might be in different circumstances during the term of the loan and you might want to pay it out early and get it out of the way. But, can you? Most lenders will allow you to pay off a loan earlier than the term period, however some will charge a fee for doing so. This fee can be quite substantial, depending on the lender and at what point you decide to pay it off. Some lenders will charge less depending on how close to the term period you are when paying it off. It is worth checking on the lender’s policy, just in case there are some sneaky fees involved.
8. Is a personal loan right for me?
Do you really need a personal loan? Or will a different loan type be better? Depending on what you hope to use the money for, a personal loan may be the best choice. If you want a little extra spending money for a holiday or perhaps your dream wedding, a personal loan might be best. But, for a new car, motorbike or household renovations, you may find there are different loans on the market that may be better suited to your needs. Have a look at what you want to use the money for and decide whether a personal loan is the best option for you.
There are many questions to ask yourself and the lender before you go ahead and apply for the loan itself. You may find there are better lenders than others, depending on your needs. By asking the right questions, you will easily be able to ensure you get the right loan every time.