Tips for choosing a personal loan

After you have studied your ability to assume a debt and know exactly how much you can assume monthly you should know how to choose the cheapest personal loan option that fits your budget. To achieve this goal please follow these tips.

The type of interest

The type of interest

There are two types of interest to choose from, this can be fixed or variable. The fixed as the name says will remain intact for the term that the contract has been made. On the other hand if you obtain a variable interest, this will be subject to some type of economic indicator, for example the 12-month Treasury Average Index (MTA), Constant Maturity Treasury (CMT) or National Average Contract Mortgage Rate. In this case the interest will go up or down according to the changes that have any indicator that is chosen.

In difficult and unstable economic times, it is much safer to obtain a fixed interest, although they cost a little more, in the long run they are cheaper and you can be sure that your payment will not change. You will know exactly how much your monthly fee will be.

Beware of fees

Beware of fees

The fact that a specific type of credit has lower payments does not necessarily mean that it is lower. The term of this must also be taken into account. Then the interest along with the number of payments that should be made to determine the total cost of the credit. This means that you must get your accounts right and see how much is the difference between the amount you are being granted and the monthly payment you must make each month. To know these exact accounts, it is a good idea to make use of the credit comparison tools available on the Web.

Associated products

Associated products

Sometimes credit organizations grant loans subject to obtaining other products, for example it could be a life or disability insurance.

Sometimes the entity conditions the granting of a loan to the hiring of other products; as for example a life insurance or unemployment. This usually happens with entities with which you do not have an established relationship. They will make you open a new account which involves living expenses. This type of additions make this loan more expensive, so estrus is something that must be taken into account when buying.

The commissions

The commissions

Ask them how much they charge for opening the account for the first time or for paying the loan ahead of time. This is called a penalty for advance payment. On the other hand there are entities that offer interest as low as 0.5%, however they charge high commissions in which they include the cost of financing the loan.

Be very careful especially when applying for short-term loans because the average interest rate of these is usually much higher when the time to pay this loan is shorter.

The small print

The small print

Usually commission and interest data is put in small print on the bottom of the loan contracts along with other aspects that we are not taking into account. Then read very well and if there are things you do not understand do not be ashamed to ask, you are in your right. Please ask and do not proceed until you get a satisfactory answer.

And to finish, never get financial commitments that you can not pay back as this will only make the situation worse. It would only be a temporary lifeguard that in the future would make it sink more instead of helping it to come out afloat.