5 Traps to Avoid When Getting a Personal Loan

A Personal loan is usually the quickest one we can get when we want some extra cash for emergencies. We often see emails and messages from various banks, personal loan creditors that promise us to give the required amount earliest without much paperwork and that too in very less interest rate. Sounds wonderful, isn’t it? But in reality, these personal loans are much worse than we can ever expect. Remember these points before you think of applying for personal loan next time.

1) Pre-compute interest: This is a very complex method to calculate the interest rate; it makes you pay more interest rate in the early days of the loan. So if you actually planning to pay off your personal loan as soon as possible you will be actually paying more interest rate than it was offered to you. So ask if your personal loan comes with pre-compute interest rate and if it does avoid taking such loans even if it is as less as $2,000 loans.

2) Origination fee: Many personal loans come with an origination fee which is non-refundable and cannot be avoided either. But many creditors will not tell you about it and you won’t understand as it is deducted from the loan. Know more about this fee before you choose any personal loan.

3) Pre-payment penalty: Some creditors can charge you a penalty if you are paying off the loan early. It is important to check if your loan comes with any pre-payment penalty, else you might end up paying pre-compute interest, origination fee and pay off the loan early along with penalty.

4) Compare the interest rates: Banks and creditors can charge you different interest rates, so it is important to compare different interest rates the other parties are providing. This website https://epikavippi.fi/lainaa-2000/ shows a good comparison between interest rates between different credit providers.

5) Insurance with the loan: We all want to make sure that our family does not suffer from the debt after our death. The credit providers make use of this insecurity to sell us additional insurances along with the loans. They tell that these insurances come with very fewer charges but in reality, these charges are much more. Don’t let the credit providers trick you with such schemes.

Close Menu