5 Things to Look for in the Personal loan

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5 Key Features to Consider in an Personal loan
When choosing between multiple personal loan offers, compare features such as discounts and customer service.
By Annie Millerbernd Lead Writer for Personal loans, "buy now, pay later" loans, cash advance apps Annie Millerbernd is an NerdWallet expert on personal loans. Prior to joining NerdWallet in the year 2019, she worked as an investigative reporter in California and Texas as well as a digital content specialist at USAA. Annie's work was cited by the press and was published in The Associated Press, USA Today and MarketWatch. She's also been quoted by New York magazine and appeared on NerdWallet's "Smart Money" podcast, in addition to local radio and television. She's based in Austin, Texas.





Oct 26, 2021


Written by Kim Lowe Lead Assigning Editor Consumer lending Kim Lowe leads the personal loans editorial team. Kim Lowe was hired by NerdWallet after 15 years of managing the content of MSN.com that covered food, health, and travel. She started her career as a journalist for publications which covered mortgages as well as the restaurant, supermarket and mortgage industries. Kim obtained an undergraduate degree in journalism from 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 and settled on a personal loan However, the work isn't over yet. Your next task is choose which lender can make you the most favorable offer.
Affordableness should be a primary priority. If one lender has a unique annual percentage rate, then it's likely to be the best choice. If you're offered two or more competing offers take a look at particular features like discounts, time to fund and flexible payment options to break the tie.
Here are five features to look for when you are comparing personal loans.
No fees
Prepayment and application charges are uncommon for personal loans However, you might be charged an origination fee. This charge -- usually between 1% and 10% of your loan amount typically taken off of the loan before you receive it, but a lender may include it in the monthly installments, according to Jovan Johnson. Johnson is an Atlanta-area accredited financial advisor. The cost isn't anything you pay in exchange for this fee. It's an amount the lender will charge to process the loan.
A fee for origination doesn't automatically make the loan one of the most costly, Johnson says. This includes the interest rate and any other fees, to see which loan is the most affordable.
Certain online lenders who work with good- or excellent-credit borrower (690 or FICO higher) offer no charges for late or nonsufficient funds fees.
The most suitable personal loans for 2022.
Check out the best private loans for all types of credit. The loans have been thoroughly researched and compiled by the Nerds.






Rate discounts
Rate discounts are usually small advantages that could add up. A lot of lenders will reduce your rate by a small amount -- typically 0.25 to 0.5 percentage points in the event that you make automated payments.
Other lenders may reduce your rate by one per cent or so for the debt consolidation loan in the event that you let them directly pay off your debts, instead of offering the cash to you.
Banks often provide discounts for their existing customers, especially those who have a significant amount of money in money market or savings account, says Tyler Smith, a CFP with BBK Wealth Management, a bank in the Indianapolis area.
lets you check your rate without hurting your credit score, but it's more prevalent with online lenders than at banks. You could take the rate quoted from an online lending company to bargain a lower rate with banks, Smith says.
"Especially especially if you're in a position where you have excellent credit and a solid credit history, they'll try everything they can to get you to borrow money," he says.
Check if you are pre-qualified for an individual loan - without affecting your credit score
Simply answer a few questions to get customized rate estimates from several lenders.


The amount of the loan
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Rapid financing
Personal loans can help you cover emergencies, such as a roof repair, because they're typically repaid in less than one 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 next day. Other lenders can accept and approve a loan within another couple of days, according to Alvin Carlos, a Washington, D.C.-based CFP with District Capital Management.
"If, let's say, you're required to pay for a medical bill that's due in the next day, certain lenders will pay the cash as early as on the following day." Carlos says.
A suggestion to help keep the application moving: like W-2s, pay slips and proof of address before you even begin your application.
Flexibility in payment
Your loan's repayment term factors into the amount of your monthly payment. The longer the term, the lower monthly payments but more overall interest, Johnson says.
Choose a timeline that gives the ability to pay for your monthly expenses in a reasonable amount while still keeping interest costs at a minimum, he adds. Some lenders let you pay back a loan in the three to five-year period, whereas others provide terms ranging from the two- and seven-year range.
Johnson recommends taking flexibility further by asking a lender what is the procedure in case the job you're working on is terminated or run into a crisis and have to defer payment for a day or two.
"With any loan that you apply for, it is essential to know the 'what-ifs,'" Johnson says. "Will they cooperate with you? Can they extend the loan without additional cost or upcharge?"
Marcus from Goldman Sachs lets borrowers defer a payment after 12 consecutive on-time payments. Online lender SoFi provides unemployment insurance that places the loan in forbearance.
Customer experience
Customer experience isn't as easy to quantify as origination fees and rate discounts, but understanding how things will be when you've got the loan could save you from future headaches.
Autopay doesn't suffice to allow for a seamless repayment process, Smith says. If you use a or manage your finances differently, choosing a lender that links your loan can save you years of hassle.
"With the amount of technology out there, having that convenience to connect it to is very important," he says.
Reviews from past customers and friends and even 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 reading complaints at the Consumer Financial Protection Bureau or Better Business Bureau websites.
It's even better if have a relative or family member who's had a loan before, Johnson says.
Disclosure: An earlier version incorrectly stated the specifics of the discount rate. The article has been revised.


About the author: Annie Millerbernd is an individual loans writer. Her writing has been featured on The Associated Press and USA Today.







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