5 Key Features to Consider in the Personal loan

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5 Key Features to Consider in an Personal loan
When choosing between multiple low-rate personal loan offers, look at features like discounts and customer support.
Annie Millerbernd Lead Writer Personal loans, "buy now, pay later" loans, cash advance apps Annie Millerbernd is a NerdWallet authority on personal loans. Before joining NerdWallet in the year 2019, she worked as an editor for news in California and Texas as well as a digital content specialist for USAA. Annie's work has been cited by the and featured on The Associated Press, USA Today and MarketWatch. She's also been featured by New York magazine and appeared in NerdWallet's "Smart Money" podcast, as well as local radio and TV. She's located within Austin, Texas.





Oct 26, 2021


Written by Kim Lowe Lead Assigning Editor The consumer lending Kim Lowe leads the personal loans editorial team. The editor joined NerdWallet in the last 15 years, after in charge of the content on MSN.com, including food, health, and travel. Her first job was as a journalist for magazines covering mortgages, supermarket and restaurant industries. Kim received an undergraduate degree in journalism at The University of Iowa and a Master of Business Administration from the University of Washington.







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You've researched a few different financing options before settling on the personal loan However, the work isn't finished yet. Next step would be to choose which lender will make the most favorable deal.
Affordableness should be a primary goal: If one bank provides a remarkable annual percentage rate, then it's probably the best option. However, if you're faced with two or more competing offers, weigh special features such as discounts, time to fund and flexibility in payment to cut the tie.
Here are five features to look for when looking at personal loans.
There are no fees
Application and prepayment charges are uncommon for personal loans However, you might be charged an origination fee. This fee, which is usually between 1% and 10% of the loan amount often taken off of the loan before you get it, however, a lender could include it in monthly payment, says Jovan Johnson, an Atlanta-based qualified financial planner. The cost isn't anything you pay in exchange for this fee. It's just money the lender charges to take care of the loan.
An origination fee doesn't automatically make an loan the most expensive, Johnson says. The fees include the interest rate and any other charges, to determine which loan costs the least.
Some online lenders who work with good- or excellent credit customers (690 or higher FICO) charge zero fees for late or nonsufficient funds fees.
The most suitable personal loans for 2022.
Find the top personal loans for all kinds of credit. The loans have been thoroughly researched and compiled by the Nerds.






Rate discounts
Rate discounts are typically small benefits that can be significant. Many lenders offer to reduce your rate by a small amount, usually 0.25 up to 0.5 percentage points in the event that you make automatic payments.
Other lenders could reduce your rate by a percentage point or two on a debt consolidation loan when you allow them to direct pay your outstanding debts instead of offering the cash to you.
Banks often provide discounts for their current customers, particularly customers with large amounts of money in a savings or investment account, says Tyler Smith, a CFP working at BBK Wealth Management within the Indianapolis area.
lets you examine your rate without affecting your credit score, but it's more prevalent with online lenders than at banks. It's possible to use the rate you were given from an online lending company to get a better rate from the bank you use, Smith says.
"Especially when you're in a situation where you have good credit and good credit history, they'll try everything they can to convince you to take out cash," he says.
Find out if you're pre-qualified for an individual loan and it will not affect your credit score
Just answer a few questions to receive personalized rate estimates from multiple lenders.


The loan amount
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Quick funding
Personal loans can help you cover urgent expenses, like a roof repair, because they're typically repaid in less than an entire week -- and sometimes even faster.
Online lender LightStream claims that applications received prior to 2:30 p.m. ET during a working day and with all the required documentation can be accepted and funded on the same day. Other lenders can approve and fund a loan within a day or two, says Alvin Carlos, a Washington, D.C.-based CFP with District Capital Management.
"If we say you have to pay an medical bill due in the next day, certain lenders will pay the money as soon as one day later," Carlos says.
A suggestion to keep things moving: like W-2s, pay stubs and evidence of address prior to when you even begin your application.
Flexibility of payment
The term of your loan's repayment is incorporated into the size of your monthly payments. A longer term results in smaller monthly payments, but also more interest paid overall, Johnson says.
Pick a plan that offers you affordable monthly payments , while maintaining interest rates at a at a minimum, he adds. Some lenders let you repay a loan within three or five years, and others have terms that range between the two- and seven-year range.
Johnson recommends taking flexibility further by asking a lender what happens if the job you're working on is terminated or run into an emergency situation and have to miss a payment or two.
"With any loan that you apply for, it is essential to know the 'what-ifs,'" Johnson says. "Will they collaborate with you? Are they willing to extend the loan without additional cost or upcharge?"
Marcus by Goldman Sachs lets borrowers defer the due date after 12 consecutive on-time payments. The online lender SoFi provides unemployment insurance which puts a loan under forbearance.
Customer experience
The customer experience isn't as simple to measure as origination charges and rate discounts, but understanding how things will be when you've got the loan could save you from the future stress.
Offering autopay isn't enough to make repayment seamless anymore, Smith says. If you use a or manage your finances in a different way selecting a lender that links your loan can save you years of hassle.
"With the sheer amount of technology out there, having that convenience to connect it is crucial," he says.
The subjective reviews of past customers and friends in addition to impartial online reviews could reveal issues that you did not see before you borrow.
You can find out what other customers think of the lender by looking up complaints at the Consumer Financial Protection Bureau or Better Business Bureau websites.
It's even better if have a friend or family member who has used a lender previously, Johnson says.
Disclosure: An earlier version misrepresented the specifics of a rate discount. This article has been updated.


About the author: Annie Millerbernd is an individual loans writer. Her work has appeared in The Associated Press and USA Today.







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