The total outstanding household debt rose to a new all-time high of $313 billion in 2020. Also, 3.1 million new personal loan accounts were created in the same period. This makes personal loans a big business.

But being so competitive means personal loan providers have to offer something different from each other if they want your business. And you need to know what that is before deciding who to take out the personal loan with.

There are loan provider options everywhere you look these days, but finding the right personal loan provider for your needs can be a daunting task.

This blog post will outline everything you need to know before deciding which personal loan provider is right for you.

Who Are Personal Loan Providers?

First, you need to know who personal loan providers are. They can not only be banks or credit unions but also online lenders and personal finance companies. It’s important to check if your existing bank offers personal loans before looking elsewhere.

But what should determine which personal loan provider you choose? Here are some things to consider.

Your Credit Report and Credit Score

The personal loan provider will look at your credit report and score to see if you are eligible for the personal loan. They want to make sure that you pay back what you borrow. If there is a problem with either of them, like bad credit, then it might be hard to get approved for a personal loan through some providers, but not all.

You can check your free annual credit report from the three main credit agencies to see what is on there. If you have less than perfect credit, it might be time to give your score a boost. You can do this by paying down debt or getting a secured loan before applying for personal loans again.

Some companies offer monthly access to your updated FICO Score. This gives an even better idea of where you stand compared with other borrowers in terms of risk and repayment ability.

But if everything looks good, then being approved shouldn’t be too hard especially through online providers. They don’t want their own in-house lending teams overwhelmed with applications, so they prefer pre-screened customers to keep the process moving quickly. But this doesn’t mean that you can automatically choose any provider; there is still more to consider.

Read Online Reviews About the Lender

Another consideration is to read online reviews about the personal loan provider. This will help you get a better picture of how they operate and if there are things that borrowers complain about. Things such as slow repayment processing and hidden fees.

It’s good to check what others say on money discussion forums. People tend to share their own experiences with different financial products, including personal loans. There can be some useful insights here, especially if it isn’t the first time someone has taken out a personal loan through this company.

But make sure not to take everything at face value. These comments might only represent one person’s experience – even if it was negative – and should always be weighed up against positive comments too.

How Much You Can Borrow

This is the main thing that you need to consider. Why would anyone take out a personal loan if they can’t borrow enough?

There are limits on how much you can borrow with most providers based on your credit rating and income level. But online lenders tend to have more generous borrowing limits compared with traditional banks. The latter might want higher deposits or collateral when making loans.

What kind of limit will depend on what type of budget help you require. It will also depend on your own circumstances, including existing commitments like car finance payments.

Also, think about plans such as home renovations which could lead to additional costs later, requiring further funds from another source.

Repayment Terms

It’s important to consider the repayment terms of a personal loan. These include how long you have before repayments start and if there are any fees for early repayment or missed repayments.

Some providers allow borrowers to pay off their loans faster without penalty. Others charge an extra fee on top of interest payments which can be expensive over time.

So, always check what your options are in this regard. You don’t want to face surprise charges when handing back money to creditors at the end of it all.

Also, you need to find out if your salary automatically goes towards loan repayments. This is how some providers make sure that loans are paid back on time. But not all personal loan providers do this, so read the small print carefully before signing up for anything.

Repayment terms will also depend on your credit score and income level. Those with a strong rating or more money coming in might get a longer repayment period.

Interest Rates

All personal loan providers will charge some interest on top of what you borrow. So, it’s important to consider this as well when choosing the best option out there.

As we mentioned above, those with good credit ratings and more money coming in might get better rates than others struggling financially and with a low income. But even then, they’re not always the cheapest choice around, so consider comparing loan costs first before deciding.

Interest rates for personal loans vary from provider to provider. So, it’s always worth checking the small print here, too, before signing on the dotted line. Providers might offer different rates for the same loan depending on your circumstances.

You’ll find lenders offering fixed and variable interest rates. The latter can be more expensive in some cases because they’re linked to other factors, like the base rate.

Before choosing a personal loan provider, make sure you know how much interest you’ll be paying on your loan. You can do this by checking out the APR (annual percentage rate).

Customer Service

Make sure you always consider customer service. This is where many new borrowers go wrong because they don’t consider it when getting a loan.

Many personal loan companies are often more focused on selling financial products than offering good support to customers afterward. But some providers do offer a helping hand if anything goes wrong with your repayment schedule or personal circumstances change drastically.

So, check what kind of help the provider offers in this regard before signing for anything at all. Whether you’re taking out a small or large cash sum, you should consider customer service.

A provider should help you understand the loan terms and conditions before signing on the dotted line. This is part of what you should expect from your financial provider so make sure it’s included in their service first and foremost.

Different Loan Types

When choosing a personal loan provider, it’s important to consider the different options you have available. This will depend on your own circumstances and plans and how much money you want to borrow too.

For example, if you need a large sum of cash in place quickly, then a payday or short-term loan might be best for this purpose only. But even these come with high interest rates, so make sure they’re viable before signing up.

On the other hand, if you want to borrow even more money but over a longer period of time, then look at larger loans. These are secured against your home or car, so the rates may be slightly lower than with payday lenders.

Some common types of personal loans are:

  • Secured loans
  • Unsecured loans
  • Bad credit personal loans
  • Payday Loans

And depending on your own circumstances, you might need more than one type of loan to make ends meet. So be sure to consider this before signing up for anything too. It could save you a lot of money and hassle later.

Processing Time and Application Process

When choosing a lender, it’s also important to consider the personal loan application process and how long you have to wait for your cash.

Some providers might offer different processing times depending on which type of loans they provide. So if speed is an issue, then check this out first before signing up with them too.

You’ll typically find that some lenders can approve applications in as little as 30 minutes while others take longer than 48 hours to complete their checks, so be aware of this when looking at different options out there.

You might also consider the application process itself. Some providers might ask for a lot of paperwork to prove your identity and financial status. Others don’t need as much before giving out their cash.

One thing is for sure, consider the whole application process before agreeing to anything. This will help you choose a personal loan provider that meets your requirements and needs without any trouble.

Consider a personal loan from Plenti if you want a quick and easy application process with instant approval.

Choose the Best Personal Loan Provider

Choosing a personal loan provider is about knowing what you want and need from your personal loans. Speedy application processing, low interest rates, and customer service availability if anything goes wrong. All of these things should be considered before signing up for a loan.

We hope that this blog post has helped you find the perfect personal loan provider for your needs. For more information, check out the other articles on this blog.