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Tips For Taking Out Personal Loans

11 May 2013 5 Comments

canstockphoto11058891The personal loans war is hotter than ever with some financial institutions practically giving away personal loans at rock bottom rates.

Now is the perfect time to get a personal loan at a rate that suits your budget. Below are a few tips to consider when looking for a personal loan.

Shop Around To Find The Best Rate

As with anything it pays to shop around to find the best APR. The APR or Annual Percentage Rate is the actual cost of a personal loan. You will also want to check out all fees associated with the loan and the date your payments are due each month. Many financial institutions especially banks promise a low rate to current customers who have existing accounts. However, you may still be able to find a cheaper APR elsewhere.

Read The Fine Print

Before applying for a personal loan be sure to read the fine print to be sure you are qualified. For example, some financial institutions have a low APR for customers that have both checking and savings accounts or for customers that have mortgage loans through them.

Consider Charges For Early Pay Off

Even though it may seem impossible at the time you are applying for a personal loan but consider what the charges will be if you pay off your personal loan early Even if you aren’t considering an early pay off it’s a good idea to apply for a loan with no early pay off fees.

Consider PPI

PPI or Payment Protection Insurance is especially useful if you become sick or disabled and cannot repay your personal loan. Many financial institutions have this policy however the rates can be expensive. When shopping around for a low APR for your personal loan be sure to check out the rates on PPI as well.

Before getting PPI be sure to read all of the fine print and clearly understand all of the exclusions. These types of policies usually have an extensive list of exclusions of what is covered under PPI and what is not.

Know Your Credit Rating

Before applying for a personal loan be sure you know your credit rating. Most financial institutions are only required to offer low APR’s to a small percentage of customers. So if your credit rating is in poor condition you may not be offered a low APR but a higher one instead.

These are only a few tips to consider before applying for a personal loan. APR’s can fluctuate depending on the economy so be sure you choose a low APR and a monthly payment that you can afford. Be sure you check out all the financial institutions in your local area and that you know their guidelines for personal loans. Also be sure you know all the terms and conditions of the personal loan before signing any paperwork. If there is something you do not understand be sure to ask questions and that you have a clear understanding of all the paperwork involved before signing on the dotted line.


  • freemoneyminute said:

    Nice outline of tips for taking out a loan. Hopefully your ultimate goal is to be financially free so you do not have to take out any more loans!

  • KC @ genxfinance said:

    Shopping around first benefits you a lot. You get the best deals and you get the chance to do a little digging about the finance company.

  • Johan Bengtsson said:

    Thanks for the guide on how to take out personal loans. Not in a need of it currently myself but will pass it on to some friends.

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