There are quite a number of people who would not consider taking the help of online lenders to secure a loan. Online lenders at times offer some of the best rates for any type of loan that the borrower is looking forward to. When looking for loans it is very important that you compare the rates from various lenders. This article is focused on comparing the loan quotes given by various lenders while taking loans.
The first thing you should do after you have decided to take a loan is to compare the loan quotes provided by various lenders. When dealing with conventional lenders the borrower is required to go to the lenders personally and request them for the loan quote. But when dealing with online lenders the borrower can get the same quotes sitting in the comfort of his house. Besides comparing the loan quotes from individual lenders web sites there are a number of web sites that have the provision loans quotes. Most of the lenders have their contact information on the site and this can be used to get in touch with the lender to get the loan quote.
Now let us see the various features of the loan quote. The loan quote obtained from the lender would have the cost of the loan and this would include the fees and the interest rate involved with the loan.
The interest rate offered by the lender depends upon various factors. The most important factor is the credit rating of the borrower. If the borrower has a good credit rating then the lender can offer him a lower interest rate as compared to a borrower with a bad credit rating. When you get in touch with the lender you should confirm whether the lender is offering a fixed or variable interest rate on the loan. With the fixed interest rate the interest remains the same throughout the period of loan and hence your monthly payments are fixed. With a variable interest rate the interest rate would fluctuate depending on the rates prevailing in the market.
There are two ways in which the interest rate can be calculated. One is the APR or the Annual Percentage Rate. The APR gives the total cost of the loan including the other costs also. When comparing the loan quotes the borrower should take into consideration the APR but the monthly interest rate should also be considered. The APR however would not give the loan term cost which can be known only when the individual rate of the loan is known.
When looking at the interest rates the borrower should be careful. There are some loans that have introductory offers and would give you a lower interest rate in the beginning of the loan but with time the interest rates also increase. The average of the introductory rate and the increased rate can be found in the fine print of the loan. When the interest rate is high it would mean higher monthly payments and this would make it difficult for the borrower to keep up with the payments.
When taking the loan you should know that you would have to pay monthly installments towards the loan. When you ask for the lender for the loan quote you should also request for the amortization schedule. With the amortization schedule you would know the total cost of the loan and also how much are you supposed to pay every month during the life of the loan.
Apart from the interest rate and the fees there are some additional costs that are not included in the APR. In case you are unable to keep up with the payments or you pay late for a month then you would have to pay a penalty on the loan. This penalty varies from one lender to another. This is a very important factor that should be kept in mind while requesting a loan quote from the lender. Be frank in asking the lender about the hidden costs of the loan. There are some lenders that would not charge a penalty but would increase the interest rates this can make the loan costly. Hence before you take the loan you should ask the lender about these factors.
There are times that the lender would charge a pre-payment penalty for the loan in case you pay off the loan before time. You should confirm all these things with the lender before applying for any loan. Also confirm with the lender about the other fees like the transaction fees, application fees, administrative costs, legal fees and the closing costs. These fees at times are not included in the APR it depends on the lender whether he include the fees or not. When you request for a quote you should make sure that you ask the lender for all these costs. Make sure that the lender gives you all these costs written on a paper so that it is easy for you to confirm any doubts that arise at the time of the payments.
Once you have the quotes from the lender you can compare these quotes and decide on the lender whom you want to deal with. When comparing the quotes you should consider all the factors and look at all the aspects involved in the loan. Always go in for a loan that you are sure you can keep up the payments with. Defaulting on a loan can spoil your credit report hence it is very important to keep up with the payments towards the loan.
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