How to Choose a Lender

Choosing the right lender is the key to getting the loan you need at an affordable rate and with reasonable terms. Loans are widely available, but they’re not all created equal, which means some will be better suited to your needs than others. Here are some guidelines to help you choose a lender you can trust and who will deliver a loan that meets your needs without putting your financial future at risk.

Get Your Credit Score
To get an idea of how you’ll be received by various lenders, you’ll want to start with your credit score. Your credit score is comprised of five elements: payment history, credit utilization, length of credit history, new credit, and type of inquiries. Get familiar with your scores before applying for a loan—you might get rejected if your scores aren’t up to par.

Decide Between An Online Or Traditional Loan Provider
The first step is deciding between an online lender or going to a traditional bank. Online lenders are more convenient and can save you money if you do not mind filling out several applications. On the other hand, if you would like face-to-face interaction, then you should consider going to your local bank. Regardless of where you decide on getting your loan from, make sure it is a reputable institution. It can be easy being scammed into thinking that one lender is better than another.

Decide On The Best Amount To Borrow
Your first step is figuring out how much you want to borrow. While lenders will let you apply for up to $500,000 in loan amounts, that doesn’t mean you should take it all. Determine exactly how much cash you need for your purchase and buy only what you need. Too often borrowers fall into an I’ll borrow more than I need because why not? mentality.

Consider A Personal Loan
If you can’t pay your bills, applying for and taking out personal loans may be an option. However, there are two main types of personal loans: secured and unsecured. Secured loans require collateral—such as a house or vehicle—as security in case you default on payments. Unsecured loans are those that don’t require collateral or creditworthiness.

Apply For A Loan From A Reputable Institution
Reputable institutions will ask for your contact information, banking details, and employment information. They will do a credit check on you and may verify your bank account with one or two small deposits. The amount varies from lender to lender. Once all of that is checked out, you’ll be pre-approved for a loan based on your qualifications! You can take advantage of these pre-approvals by visiting multiple lenders and comparing interest rates and repayment options. Some lenders might advertise lower interest rates but higher fees.