Fast loans have enabled individuals to easily access funds to take care of emergencies and other financial responsibilities.
However, borrowers need to consider several factors before taking out quick loans. Doing so will help them make a more informed decision on their ideal lender, how much they should borrow, etc.
Below is an extensive guide on what individuals should pay attention to when taking out a quick loan.
Your Credit Score
One of the main factors individuals need to consider before taking out quick loans is their credit score. Since quick loans don’t require borrowers to provide collateral, most lenders like SOSCredit mainly rely on an individual’s credit score to determine whether or not they’ll give them a loan.
Different quick loan lenders have varying credit score limits. So, individuals should research and find a lender with a credit score limit they qualify for.
But what if one has a poor credit score? Fortunately, there are many lenders who offer quick loans to individuals with poor credit scores. However, keep in mind that they may have stricter loan terms like high-interest rates and having a co-signer.
Why Do You Need the Money?
Quick loans have come with the convenience of enabling borrowers to access money anywhere, anytime. While this is a major advantage, it can land individuals into unnecessary debt if they are not clear on why they need the money.
So, borrowers need to determine why they need quick loans. For starters, they need to determine whether the need is urgent; if not, can they save for it? Doing so will significantly prevent them from paying loans that were unnecessary in the first place.
This is another vital factor people should consider before taking fast online loans. Different quick loans in the Philippines have different interest rates. So, borrowers need to research and find a loan with suitable interest rates.
Individuals should also check whether the loan has a fixed or variable interest rate. While a variable interest rate may be low initially, it isn’t fixed, meaning it is bound to rise throughout the loan repayment period. On the other hand, while a fixed interest rate may be high initially, it doesn’t fluctuate throughout the repayment period, which is quite an advantage.
Loan Terms and Conditions
This is another crucial factor individuals need to consider when taking out fast online loans. A lender’s loan “terms and conditions” document contains everything one needs to know about the loan.
For starters, it includes the interest rates. As mentioned earlier, it’s recommendable for individuals to check whether their loan has a fixed interest rate or variable interest rate. Another vital information in that document is the list of extra costs the lender will charge the borrower once they receive their loan.
Other details in the document include the repayment period and the terms and conditions regarding defaulting the loan, to mention a few.
Going through all this information carefully can help an individual make a more informed decision on whether that particular quick loan is ideal for them.
Typically, fast loan lenders charge borrowers extra fees apart from the interest rates. They do so to compensate for their efforts in processing the quick online loans and other inconveniences the borrowers may cause while repaying their loans.
The most important additional fee lenders charge is the loan processing fee. Some loan companies deduct this fee from the original loan amount, while others allow individuals to pay it when they repay their fast online loans.
It’s essential for borrowers to check whether the processing fee is deducted from their initial loan amount or added to their total quick loan amount. Doing so will help them decide whether or not they are comfortable with that arrangement.
Other extra fees lenders charge borrowers include late repayment fees and prepayment penalties, to name a few. Usually, details about these additional charges can be found in the loan’s terms and conditions section.
Terms And Conditions Regarding Defaulting the Loan
Another critical factor borrowers need to pay attention to when taking out quick loans is any information regarding defaulting the loan.
Defaulting is the last thing most people want since it has some severe consequences. That is why borrowers need to check if the lender has included any information about defaulting the loan (which they usually do) in the loan’s terms and conditions document.
Typically, this information specifies when the lender considers defaulting due to missed loan repayments. In simple terms, after how many missed loan repayments does the lender decide that the borrower has defaulted on their loan repayments? What’s more, it also specifies the strategies the lender will take to recover their money.
This information can help an individual plan accordingly on how to make their monthly loan repayments on time.
Quick loans have been a breath of fresh air for many people. However, at the end of the day, it is still a loan. So, individuals need to keep in mind several factors to ensure they don’t get into unnecessary problems in the future.