When you are in need of a small personal loan, it may be easy to bypass most of the vital details of the loan. This could end up leaving you with more debt than you started off with and a big financial headache. When it comes to getting these loans, you should know the secrets of the lending business, so here is a few pieces of insight that may help you understand this process better.
Pre-Approval Letters Shouldn’t Be Counted On
Pre-approval letters can make you jump into action and apply for small personal loans, but they should not be considered a guarantee. They are often generated by computers, which do not go into your full credit history, so just because you may be approved before going into the lender doesn’t mean you can walk out with your loan.
Rates Aren’t the Only Cost to Consider
Just because a lender tells you that they can get you a great rate doesn’t mean you will actually be paying less. You must look through the fine print at what other fees are associated with your small personal loan in order to know just what you will be paying back. Add up the total that you will pay back at the end of the loan before deciding if it is worth it or not.
Lenders Charge a Lot to Refinance for a Reason
Most lenders count on the fact that the high price tag associated with a refinance will keep most people paying more. It may save you a bit of money each month, but if you are required to come up with money up front that you just don’t have, you will keep paying the higher interest. If you can save up this money to pay the fees, you can refinance for a lower rate that will save you more over the life of your loan.
Your Age Matters
Most people who apply for a small personal loan think about their income, or their credit, but few consider their age as an item that can qualify or disqualify them for a loan. Due to the fact that this can be viewed as discrimination, it is not something publicly announced, but if you are too old or too young, you are considered a higher risk no matter what your credit history says. Even if you are over 60 with near perfect credit, your age can make it harder to qualify for a loan because you are closer to the end of your life and the lender may not get their money back.
Banks Love All Your Business
A bank, or any other financial institution, understands just how complicated it can be to move your business from one institution to another, and they count on this. They know that even if they make mistakes or do not give you the best rates, if they have the majority of your financial business tied up in their establishment, you are not likely to go through the hassle of leaving. If you find a bank with better options, less fees, or better interest, it may be worth taking the time to move your business so that you end up ahead when all is said and done.
Your Credit Score
Most people believe that their outstanding credit and payment history is all that their credit score is comprised of. This, unfortunately for some, is not true. How many times you have requested credit, what you have requested credit for, how many jobs you have had, your income, and even your obligations that could take up some of your income can all make up different parts of your credit score, so make sure you are paying close attention to your credit if you are in need of a small personal loan.
Computer Programs Can Decide On Your Loan
There are times when you put in an application for a small personal loan where you are guaranteed an answer within a few minutes or up to an hour. Most of the time when this is the case, a computer program is what is actually making the decision. It uses a pre-installed algorithm to determine if lending you the money is worth the risk based off of your income, credit, and amount requested, among other qualifiers.
These tips can help you understand how getting a small personal loan can work. Granted, you may not be exposed to all of these criteria, but some of them may affect you both directly and indirectly. If you are truly in need of a small personal loan, don’t give up just because of any of these secrets. Keeping these tips in mind will help you find the best lender for your situation.