The less you pay in interest, the quicker you can pay off the principal of the loan and ultimately the less you will pay for the loan over time. This should be one of your top priorities when choosing a loan.
Personal Loan Lender Reviews
Personal loans give you the freedom to refinance your debt or pay off big purchases in one lump sum. And LendingTree, a loan comparison website, gives you the power to compare up to five offers from lenders at once; you’ll only need to complete an online form.
Read our lineup of 2024 lender reviews
What to look for in a personal loan lender
4 questions to ask to get the right personal loan
- What’s my credit score?
- Do I need a personal loan?
- How much money do I need to borrow?
- How much can I afford to pay each month?
1. What’s my credit score?
When you start applying for personal loans, lenders will want to have a rough idea of your credit score, particularly if you want to get prequalified and estimate your APR. The three major credit bureaus ー Equifax, TransUnion and Experian ー are required to give you a free comprehensive credit report annually. Request yours at AnnualCreditReport.com.
2. Do I need a personal loan?
You can use a personal loan to pay for virtually anything. But just because you can get the funding you need to make a purchase doesn’t mean that you should borrow money.
There are plenty of legitimate reasons to take out a personal loan:
Debt consolidation
Credit card refinancing
Home improvement
Medical bills
Wedding expenses
Car financing
Moving and relocation
Lenders will want to know why you are taking out a personal loan. Before you get ready to apply, make sure your reasoning for taking out a personal loan is crystal clear.
3. How much money do I need to borrow?
Get a rough idea of how much money you need to borrow before you start applying for personal loans. For example, a couple taking out a personal loan to pay for their wedding could get an idea of how much they’ll spend by asking vendors for quotes.
If you’re taking out a debt consolidation loan, you’ll want to reference that credit report you requested. Your credit report will list all debts that are taken out in your name, so you can add them up and determine the amount you need to borrow. You could also refer to your credit card billing statement or call your creditors to learn the payoff amount.
Since you’ll be paying interest on the entire loan amount, it’s best to find a loan that’s just the right amount. If you take out much more than you need, then you’ll end up paying interest on money you didn’t need to borrow.
4. How much can I afford to pay each month?
When you’re borrowing money, be transparent with yourself about your finances. You don’t want to get in over your head with a personal loan that you can’t afford to pay back. If you default on your loan, then you risk lowering your credit score. Before you borrow, think about where you stand financially and where you expect to see yourself in the near future.
To estimate your monthly payment based on your credit score and the amount of money you need to borrow, check out LendingTree’s personal loan calculator.