Avoid These Personal Loan Mistakes At All Costs

Avoid These Personal Loan Mistakes At All Costs

Most people apply for a personal loan to fund an unexpected and often urgent expense. As a result, they make rash decisions that negatively affect their finances. This article will take only a few minutes of your time but will help you make smart decisions in the long run when applying for a personal loan.

1. Not Checking Your Credit First

You credit score will greatly affect the result of your personal loan application. A bad credit score may result in denied application or a higher interest rate. On the one hand, if you have a high credit, you can use that as leverage to get better loan terms. On the other hand, if you have a bad credit score, you can opt for low-cost personal loans such as the ones offered by us.

2. Not Paying Attention To The Annual Percentage Rate (APR)

A lot of people merely focus on the monthly loan payment. However, an equally important factor is the annual percentage rate. The APR provides a more accurate computation of your loan cost because it includes loan fees on top of the interest rate. A personal loan without additional fees is, of course, preferable.

3. Not Reading The Fine Print

It is important to do this before signing a loan. You do not want to be surprised with a high monthly payment as a result of hidden fees. As mentioned earlier, the APR could point you to potential fees in your loan terms. Some hidden fees to watch out for are origination fees, prepayment penalties, and late fees. 

4. Squandering Your Loan

While you are free to use the funds of your personal loan however you like, keep in mind that it still incurs interest. Using it for something inessential could be detrimental to your long-term financial health. It would be better to use it for urgent, necessary expenses or to consolidate credit card debt or student loans. 

5. Making Late Payments

Late payments do not reflect well on you as a borrower. Aside from potentially incurring a late payment fee, this behavior will lower your credit score and therefore affect your ability to get loans in the future. To avoid late payments, set alarms in your calendar a few days before the due date or set up automatic payments from your account.

6. Not Considering Alternatives

When people think of personal loans, their minds immediately go to banks. However, banks often have strict qualification requirements for and high interest rates on their personal loans. 

As with any item to be purchased, it is a must to shop around first. Consider slightly unconventional options like Access Loans’ personal loans for federal employees. This loan offers better interest rates and involves more convenient application and payment processes.

Avoid all of these personal loan mistakes when you apply for personal loans for federal employees with Access Loans.

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* ACCESS LOANS™ products are funded and serviced by Safra National Bank of New York (“SNBNY”).