What To Know About Taking Out A Personal Loan

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What To Know About Taking Out A Personal Loan

20 July 2019
 Categories: Finance & Money, Blog

Personal loans are a great option if you need money for a variety of expenses. They are often used when you have an expense that's too large to be put on a credit card. They can be used for anything ranging from unexpected expenses to debt consolidation. The fact that these loans can be used for just about anything makes them an attractive option. However, before you decide to take out a personal loan, there are a few things that you should know. Here are three things to keep in mind.

Credit Matters

The first thing that you should be aware of when taking out a personal loan is that your credit will have an impact. In order to take out this type of loan, you will typically need a credit score of at least 660. If your credit score is not good, you may want to look into other types of loans. Your credit will also play a large role in your interest rate. The higher your credit score, the better it is for your interest rate. For those who have high credit scores, personal loans can be a low-cost way to pay for large expenses.

Interest Rates Can Vary

Another thing to be aware of is that when it comes to personal loans, interest rates can vary significantly. There are various lenders that offer personal loan services and shopping around can help you find the best deal on your personal loan. Interest rates can range anywhere from as little as 5 percent to as much as 36 percent on your loan. The average interest rate is between 10 and 28 percent. The higher your rate, the more your loan will cost you in the long run so it's important to find the best interest rate possible.

Origination Fees

If you are looking into a lender's personal loan services, you will also want to determine whether or not they charge origination fees. These fees apply when you set up to the loan and can add to your total. Origination fees can range anywhere from 1 to 6 percent of the loan's value. It's important to also factor these fees into your calculations when determining how much your loan will cost in total. The lower the origination fees, the better.

When it comes to taking out personal loans, there are a few things that you need to know. First, just like with other loans, your credit score will have a great impact on what you qualify for. Interest rates can vary significantly when it comes to personal loans and shopping around with different lenders can make a big difference. Origination fees can also vary anywhere from 1 to 6 percent of the loan amount.