Personal loans can be quite handy especially when you need to get out of a sticky situation but have no cash to help at the moment. Say you run into an emergency and need $1,000 urgently but don’t have the cash with you at the moment. Here is where the need for a personal loan comes into play.
Taking a personal loan is a pretty easy process and your chances of getting a personal loan are usually high. But even so, many people always end up having bad experiences with personal loans just because they, either didn’t read through all the terms and conditions or were never able to live up to them.
And as a potential borrower, you also need to know that debt officers usually have a few tricks up their sleeves which they can use to make personal loans cost much more than they already are in the long run. It now relies on you to ensure you don’t fall into any of these traps even as you are applying and receiving these financial remedies. Here are four traps that you need to be on the lookout for when applying for a personal loan.
1. Original fees
One of the main reasons why Northcash personal loans are very popular is their quick turnarounds; you will most likely get a personal loan that you have applied for in less than two weeks. Which is all good news? But one thing you need to be on the lookout for is the origination fees. You may end up getting shorted if you’re not careful whenever you are being handed your personal loan. Most loans come less from the initial borrowed amount. And this is usually because the fees and interest rates are deducted in advance from the total loan amount.
It is, therefore, important that fully understand how this fees works and how the percentage is calculated to avoid being shorted.
2. High-interest rates
You will find that the interest rates on personal loans are significantly lower than those of most popular credit cards. Having a good credit score can help a great deal when it comes to applying for and getting a personal loan. In fact, if you have a decent credit score, you will find that the interest rates on your personal loans are significantly lower and better compared to the borrowers with poor interest rates. However, you can sometimes fall victim of ending up with a lending company trying to sell you a loan with higher interest rates than is necessary.
Different companies offer different interest rates on their loan packages. It is important that you know the exact interest rates on the loan you are applying for and ensure you are not duped into paying higher than you need to.
3. Prepayment penalty and pre-compute interest
You may not know this yet, but some companies go as far as to even change the prepayment penalty. These companies may sit back and wait for you to delay with your regular or full repayments only to impose huge prepayment penalties on your initial loan than is necessary. This way, these lending companies can capitalize on the total interest that they can collect. You also need to watch out for this trap as well.
4. Additional insurance
At some point, you may also hear your loan officer mention something to do with additional insurances. If you don’t pay attention at this point, you may end up being convinced about the whole thing. Their pinch can be so good that you fall right into their trap. It is important that you know all the ins and outs of all these points before you fully consider any additional fees if necessary. Failure to do so can also end up adding to your overall repayments if you’re not too careful.