Taking out a loan is no small thing. Whether you’re paying for something huge like a new house, or you’re taking out a personal loan for a slightly smaller expense, it’s important to choose a lender who can support you with the right guidance, and terms throughout the life of your loan. Unfortunately, in today’s economy, many people feel completely bewildered by the concept of managing their money.
Whether this is your first loan or your twenty-first, the following five things should always be at the top of your mind when you’re trying to find a lender you can trust to work with you for the foreseeable future.
1. Experience and credibility
This is first, and one of the most important elements you’ll need to look at when finding a lender for your loan. You need someone who isn’t going to dupe you into paying more than you owe with fees you didn’t expect and extra costs hidden beneath your repayments. A credible lender is someone you can trust to give you the full facts of your borrowing experience from the moment you start working with them.
If you’ve never heard of a lender before, then it might be worth doing a quick search on Google to see what comes up under their name. Some companies will show reviews from previous customers that they might have worked with. As well as looking for credibility, it’s also worth picking a lender that can deliver experience in the sector that you’re interested in. Experience is generally established by the amount of time your lender has been in business.
2. Interest rates
The chances are that interest rates or “APR” are one of the first things you thought about when you started looking for a lender. It’s important to remember that interest rates will determine how much you officially end up paying for your loan, so the lower these numbers are, the better off you’ll be. However, you can’t always just take the rates that you see on a bank’s website at face value.
When you’re evaluating interest rates, keep in mind that you’re just looking at the average rate most of the time, rather than the rate you’ll be given. Your actual interest rate will depend on a number of factors, including what your credit history looks like, and what kind of loan you’re getting. At the same time, keep in mind that interest rates aren’t always the only expense you’ll need to think about when you’re taking out a loan.
3. Flexibility for payments
When you’re searching for a lender for your loan, another thing you’ll need to be aware of is how flexible they’re willing to be with your payment schedule. For instance, will they be willing to put a payment back one month if you’re struggling to make ends meet, or will you have to pay a huge fee for any late payments?
At the same time, remember to think about things like “exit fees” when you’re taking out a long-term loan. If you suddenly find that you have enough money to pay off your loan all at once, then you’ll want to ensure that you can do that without incurring any penalties. Unfortunately, some lenders will charge you more for trying to leave the deal early.
4. Response times
The last thing you want when you’re taking out a loan is to be dealing with a lender who never responds to your questions and queries. Support is important in a financial relationship, so make sure that you can reach out to your bank, building society, or credit union whenever you need to find something out about your loan.
Response times could also relate to the amount of time it takes to get the loan into your account. If you’re in a hurry to get the money into your bank as quickly as possible for something important, then you’ll need to check with your provider to find out how long you will need to wait before you start seeing a change in your finances. If it’s going to take too long to get anything sorted, then you might need to look elsewhere.
5. Good documentation
Finally, while the paperwork might not worry you too much at first, it’s important that you have clear and legal documentation around your loan that informs you not only of what you’re responsible for in terms of repayments, but what the lender promises to do for you. Make sure that your lender is willing to provide you with all the documents you need to keep your finances in check when you take out your loan.