NEW YORK, October 11, 2022 (Newswire.com) - iQuanti: Installment loans let you borrow money and pay it back with fixed monthly payments. Many people use these to refinance debt, create emergency funds, make large purchases, and other uses. But when you're borrowing money, there are some pitfalls you must avoid. Making these mistakes can be costly in terms of time, money, and stress. This article will dive into four mistakes you should avoid when looking for personal installment loans so you can find the right loan for your needs.
1. Getting a loan from a scammer
Falling for a personal installment loan scam can cost you a lot of money and even lead to identity theft. Fortunately, there are many ways to identify and avoid scammers. For one, you can see if they're licensed in your state. If they have no website or their license isn't listed, you can contact your state's relevant regulatory department or attorney general to find out for sure.
Additionally, look at the Better Business Bureau. The BBB gives lenders a grade from A+ to F and lets customers leave reviews and complaints. Similarly, look at review sites like TrustPilot. Low ratings with a lot of reviews may signal a scam.
2. Not looking at your credit score
Your credit score plays a large role in getting installment loans from lenders that check credit. Check on your credit score before applying so you know what types of loan terms you may qualify for. To do this, request your annual free copy of your credit report from each credit bureau. While you check over your report, look for errors. If you find any, dispute them to wipe them off the report. This could give you a credit boost to help you get better loans.
3. Not budgeting for repayment
Once you take out that loan, you must be able to make each monthly payment. If you miss or are late on a payment, you may owe late fees and other penalties. You could also suffer credit damage. Stay delinquent for too long, and the lender could sell your debt to collections agencies. This can further harm your score, and you may have to deal with collections calls.
So, you should look at your monthly budget and make sure you have money to repay the loan. If not, you can cut expenses until you have enough or consider a smaller loan or longer-term length to lower the monthly payment.
4. Failing to shop around
Shopping around for multiple offers helps you find a great rate. Different lenders may offer different rates and loan amounts. Plus, some may offer same-day funding, whereas others may only offer next-day funding.
The bottom line
These days, getting a personal installment loan is simpler, thanks to online applications and faster funding. But there are still mistakes to watch out for. Make sure you check your credit score and budget for repayment before starting the process. Once you're ready, shop around for multiple offers. Then, check each lender's legitimacy by looking up their licensing information and checking out the BBB and other review sites. Avoiding these mistakes will help you get the funds you need while minimizing unnecessary stress and expenses.