Avoid these 6 mistakes when getting your next personal loan and you could save a lot of money.
We’ve helped thousands of people get a personal loan that saves them serious money.
Often we help people who have made a mistake while searching for a personal loan. It’s not their fault – they just didn’t know all the ins and outs of lending in Australia.
We thought we would share these mistakes with you in the hope you won’t make them!
Here are the 6 mistakes people make when looking for a personal loan. Work with us and we’ll help you avoid them!
Mistake #1: Not checking your credit score
Your credit score can play a major role in not only deciding if you can get a loan, but what rate you might qualify for.
It’s definitely worthwhile to check out your current credit score and look for ways to improve it. It’s free and really easy to do and an online loan service like us can also help. For further information on how to get your credit score read some of our great articles like “What is a credit score?” and “How do I improve my credit score?”.
Mistake #2: Applying for a loan with too many lenders
We see this problem often. In the search for a great deal people apply for a personal loan with many lenders.
This is a problem for two reasons.
Firstly, applying for too many personal loans can impact your credit rating. This is because an application direct to a lender will often trigger what’s called a hard credit check.
Hard credit checks are a formal credit inquiry and therefore impact your credit score.
If you apply for a loan with lots of lenders, you run the risk of seriously hurting your credit rating.
Secondly, different lenders have different lending policies.
For example, some lenders insist on a minimum time in your job before they give you a loan, some only lend to people who own a home while other lenders don’t do loans for cosmetic surgery or legal fees.
If you don’t know these lender policies you may get rejected for a loan at a lender and not really understand why. That can be very frustrating.
That’s why it’s important to use an online loan service. An online loan service can quickly scan the market and find a great deal for your situation – all without hurting your credit score.
When looking for an online loan service make sure they cover these five points:
Make sure they have at least 20 lenders to choose from. It’s important they provide alternatives for you to choose from so they need a large panel of lenders.
Excellent customer reviews. You want an online loan service that will work in your best interests. Find a broker with lots of 5-star reviews. Read the reviews to get a sense of the business they run.
An easy online process. With the internet and digital technology applying for a loan should be fast and hassle free. Make sure they have quick and simple online forms that can be completed in under 10 minutes.
No upfront credit checks. As mentioned above, this is really important. Make sure your online loan service does what’s called a ‘soft’ credit check which doesn’t hurt your credit score.
A great knowledge of lender policies so they only place you with a lender that suits your situation.
At LendLab we have over 40 lenders to choose from, are rated 5 on Google from 1500+ reviews, have a fast and simple digital application form and we don’t do upfront credit checks to protect your credit score.
We also have a deep understanding of lender policies so we can place you with a lender that suits your circumstances and avoid hurting your credit score.
So, apply now and sit back and relax while we do all the work!
Mistake #3: Be careful when shopping around
In mistake number 2 we outlined some of the problems people run into when applying for a loan with lots of lenders. Although these can be significant problems, it can be just as painful if you just take the first loan you are offered. The Australian lending market is really competitive, so we always encourage people to shop around and look for the best loan for their circumstances. However, this can be an issue when you apply directly to lenders as they do a hard credit check upfront causing your score to drop each time.
Of course, we can make the process of shopping around really easy because we can match your situation to a lender that suits you and avoid hurting your credit score. And we can save you serious money while we find you a personal loan that works for you.
Mistake #4: Not understanding all the fees and charges
Many lenders charge all sorts of different fees like set up fees, origination fees and monthly fees.
While it’s important to ensure you are getting a great rate you also need to be mindful of these other costs of the loan.
When assessing which loan is best for you make sure you add up all the interest charges and fees right through the period of the loan. This will give you a much better indication of which loan is better for you.
We can of course help you with this because we lay out all of these fees for our clients so that everything is transparent and there are no nasty hidden surprises. It’s just one of the advantages of using LendLab.
Mistake #5: Getting a payday or pay advance loans
Sometimes we see clients who needed cash quickly so they applied for a payday loan, small amount loan or pay advance loan.
While these loans feel like a quick fix there are many problems.
For example, they often have very high fees. Some charge 20% of the amount borrowed and a monthly fee of 4% per month. They also have high default fees. These types of loans can also affect your credit score. Finally, some lenders won’t lend you money if you have too many of these types of loans.
If you are considering a payday loan or a pay advance think it through really carefully and make sure you are aware of all costs, terms and conditions so you don’t end up with some nasty surprises
Mistake #6: Not making sure they can make extra repayments
You may find yourself in the position of being able to pay off your loan sooner because you have saved money or got a pay increase. Make sure the loan you get allows you to pay it off faster so you can reduce the interest you have to pay. Being able to pay off your loan sooner is really important as it improves your credit score and allows you to do other things with your money.
So, there you have the 6 mistakes people make when getting a personal loan.
Focus on avoiding these mistakes and you’ll go a long way to getting a great deal on a personal loan.
If you’d like us to help find you a personal or car loan from our large panel of lenders fill in our application form now. It takes less than 10 minutes!
The LendLab difference:
We'll find you a great rate from our panel of over 40 lenders
No upfront credit checks
apply in less than 10 minutes
5 star Google rating
Written by Michelle Gorsevski