Things to Consider Before Applying for Personal Loans Online

"Things to Consider Before Applying for Personal Loans Online"

Personal loans made easy

Are you wanting to buy a car? Pay off some bills? Or are you simply looking for a little bit of extra cash to get you through? If this is the case, then a personal loan might be the financial solution you are looking for. While applying for personal loans can be easy, there are many things to consider before you do so. 

Jacaranda Finance NZ is a lender finding service that can help you find the best loan for you. We understand what you should be looking for when it comes to applying for personal loans. So, to get you closer to your dream, we’ve compiled an easy list of things to consider before you apply. Keep reading to discover more!

1. What Do I Need a Personal Loan For?

First things first – what do you need a personal loan for? There are many different lenders out there offering different types of personal loans. So, it’s important that you shop around in order to choose the loan that is best suited for you. Or, you can let Jacaranda Finance do the shopping around for you! 

If you’re thinking about applying for personal loans, chances are that you already know what you want. However, if you don’t know, here are some ideas of different types of loans. We’ll also give you some ideas of what to use the different types of loans for.

Small unsecured loans

Only need a small amount of cash, but need it fast? Many lenders will offer fast, unsecured loans for small amounts of money. This means that you won’t have to attach an asset to your loan, such as your car or house. Your lender will therefore have no access to your assets. However, consider that unsecured loans may have higher interest rates to compensate for this.

Unsecured loans can be used to pay off unexpected bills. Such as unforeseen medical bills, wedding bills that were more expensive than expected, or unplanned education fees. Sometimes, things just come up that you can’t plan for. Small, unsecured loans can help you out in instances like these.

Secured loans

For slightly larger amounts of money, many lenders will require the loan to be secured. This means attaching an asset to your loan, such as a car or a house. In many instances, this is called collateral. If you fail to make your repayments on a secured loan, unfortunately the lender will have access to this asset. This means that they are able to possess the asset to make up the repayments. However, the good news is that interest rates will often be lower than for unsecured loans.

Usually, there’s no need to stress. If you are applying for personal loans that are affordable for you, you should be able to make all repayments. 

Car loans

Car loans are an easy way to get back out on the road without having to spend time saving up. Many lenders will offer loans specifically for buying cars. Usually, the car that you buy will be the asset attached to the loan. This means that interest rates will often be lower than they will for unsecured personal loans.

2. My Financial Circumstances

The next thing to consider is your own financial circumstances. You will need to think about this in order to find out what you can reasonably afford. 

How will I pay it off?

Do you have a steady job, or a regular source of income? Do you have the means to pay the loan back? A lot of lenders will offer flexible repayment options, so you can choose something that will suit your income flow.

That said, the general rule is that you shouldn’t borrow more than 30% of your credit limit. This will allow lenders to see that you are borrowing an amount you can afford. This way, they will be more likely to offer you a good deal on a loan rather than if you were borrowing your maximum credit limit.

My credit history

Your credit history is an important factor when applying for personal loans. For example, if you have a good credit score, lenders will consider you a responsible borrower. This means that they may offer you larger loan amounts, or lower interest rates on your personal loan. Alternatively, if you have bad credit, lenders may consider you an irresponsible borrower.

If you’re not sure what your credit score is, you can check your credit report using these websites that are approved by the Australian Government. They are obliged to provide you a free credit report every twelve months. 

If you have bad credit, the good news is that a loan is a great way to rehabilitate your score! For example, if you make all your repayments on time, this may help improve your credit.

3. Affordability and Flexibility of Personal Loans

Now we’ll get into the nitty-gritty of the loan itself. Loans aren’t static, which means that different lenders will offer different repayment terms, interest rates, and fees.

Repayment terms and instalments 

The length of your loan will determine the amount you repay in each instalment. It will also affect how fast you repay the loan, and the interest rates attached to the loan. For example, the longer the loan term, the less you will have to pay each instalment but the more interest you will pay overall. Conversely, the shorter the loan term, you may pay more each instalment but pay less interest overall. 

Most lenders are flexible with repayment terms. They will offer a range of repayments terms for you to choose from. 

Interest rates

Interest is an amount of money that a lender will charge on top of the loan repayments. Think of it as a small charge for lending you the money. The rate that a lender will charge you interest at will vary depending on my factors. For example: the amount you are borrowing, the repayment length, and your credit history, to name a few. As we mentioned earlier, secured loans often will have the lowest interest rates.

A percent or two may not sound like a lot, but trust us, it adds up! Before applying for personal loans, use Jacaranda Finance’s loan calculator to determine the interest rates on different loans.

Competitive fees and charges

Every loan will have a different range of fees and charges added to it. For example, some fees and charges may include:

Establishment feesMost lenders will charge you a small fee when you sign the contract for a new loan. This will cover the cost of processing loan documents.
Servicing feesThis is typically a small monthly fee to cover the continuation of the loan. Some lenders may not charge this.
Early repayment / early exit fees Sometimes, you choose to exit your loan early by repaying the loan quicker than you originally chose. Some lenders may charge you an early repayment fee for this.
Insurance feesInsurance is sometimes a great safety net to attach to your loan. Some lenders may offer insurance to help repay your personal loan if you are unable to repay it. For example, they may offer to help if you lose your job, or become unfit for work due to illness or injury.

The key is to find a lender with the most reasonable fees and charges. You’ll obviously want to avoid lenders that add any unreasonable expenses to your loan!

4. Good Service

Everyone wants their lender to be able to provide good service! Don’t settle for a lender that won’t work with you to provide a loan that is affordable for you. Applying for personal loans doesn’t have to be tricky if you have a good lender.

There are many small things a lender may do to demonstrate their service. For example, do they respond to you quickly with competitive and accurate information? Do they use safe technology when looking at your bank statements and credit history? At Jacaranda Finance NZ, we understand the importance of good customer service. Unlike other lender finding services, we will prioritise good service as a criteria when choosing the best lender for you.

Why should I choose Jacaranda NZ?

As we mentioned above, it’s important that you shop around to choose the right loan for you. This is where we come in – Jacaranda Finance NZ can do the shopping around for you! We’re a reliable lender finding service that could match you with a personal loan in no time. Based on the information you provide us – such as what type of loan you want, how flexible you would like the repayments to be, etc – we can choose the right loan for you. Applying for personal loans has never been easier with Jacaranda NZ’s easy lender finding service.

Simply apply with Jacaranda Finance NZ today to get started!

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