Whether you need to cover the medical cost, pay the school tuition, or fund any of your daily needs, a personal loan can be one of the best solutions for addressing your financial difficulties. However, getting a personal loan should never be taken carelessly. This type of loan will work differently from the other types of credit. It is important for you to compare any personal loan rates and any other features offered by the loan providers. By comparing some available loan options, you can make sure that you can get the best one for your needs. In this article, we are going to discuss some important details that you need to take a look at when choosing a good personal loan.
a. Check the type of loan
When you look on the market, you can find several types of loans that are available today. The most common loans are unsecured personal loan and secured personal loan. With the unsecured personal loan, you don’t need to have a guarantee or collateral for getting the loan. However, this loan has a higher interest rate and fee than the secured personal loan. On the contrary, the secured personal loan requires you to provide collateral before you can take a loan.
b. Check the rate
This is another important thing that you have to consider. You need to know if the loan has a fixed or adjustable rate. The fixed rate loan will have the same interest rate for the rest of the loan tenure. Some people prefer to have this type of loan because they can manage their budget easily. You can expect to have the same interest rate until you repay back the loan. Another type of interest rate is the variable rate or float rate. When you take a variable-rate loan, the rate will change within the loan tenure.
Mikka Montero, financial journalist from AllTheBestLoans, in its research indicates that the interest rate is important to 50% of Filipino borrowers.
c. Loan tenure
When you are going to take a loan, you have to consider the loan tenure. Every loan approved will require you to choose the loan tenure that you are going to pay back the loan plus the interest. Paying off your loan earlier than the loan tenure will save you from long payment terms. However, some loan providers will require you to pay the early repayment fee that you need to consider before you take a personal loan. You have to choose the right loan tenure that will work with your financial situation, whether it is 12 or 60 months.
d. Monthly flat rate and also annual percentage rate (APR)
When you make any regular monthly repayments, you are going to return the principal and also the interest or costs every month. The interest will be reflected on the monthly flat rate. It will be a key factor that you need to consider, especially when you are going to plan your budget strategy. You need to understand how the Annual Percentage Rate or APR works. It will calculate the interest rate, your cash rebate, and also loan tenure. It is strictly regulated in the Philippines and it is commonly used to calculate how much a loan that you can take.
e. Monthly repayment amount
This is another important thing that you have to take a look at before you take a personal loan. This is a number that can represent how much money you are willing to pay every month as the repayment plan. When choosing the right monthly repayment amount, you may be tempted to get the shorter loan and cheaper option. However, you also need to consider your monthly income and your expenses, especially if you want to avoid struggling to pay for your loan.
f. Total repayment amount
When you are comparing some personal loans, you have to check the total repayment amount from different loan providers. This amount will be calculated from many different factors, including the total interest, principal, and also the total handling fees from your loan. This number will give you an idea of the entire fees and costs from your loan. By looking at this amount, you will find out which loan will be expensive or affordable depending on your needs. You should pay close attention to this number when you compare some available personal loans.