Are you considering applying for a personal loan? It can be tempting to secure some extra cash to help finance a fun vacation or your dream wedding. In reality, though, negative effects can occur in the short and long run if you don’t take the necessary steps and precautions.
In order to be a brilliant borrower who enjoys all the pros of a loan and none of the cons, you need to know how to use personal loans to your advantage. And we know just where to start.
The Secret Weapon: Loan Calculators for Personal Loans
Here at LendingArch, we know what it takes to use personal loans in the right way. It all starts before you even begin applying for loans. The secret weapon that helps anyone prepare to open a line of credit is the loan calculator.
What is this, you might ask?
It is a special type of calculator that is designed to help you decipher how much your monthly payments will be on any loan. It can also help you see what interest rates are best suited for you and approximately how long it will take to repay the loan (and how much you’ll end up paying in the end).
Whether you’re looking for personal loans or business loans, this type of calculator can give you the knowledge you need to make an informed decision on whether to move forward with a loan or not.
While having access to more money always seems like the best option, a loan calculator like LendingArch’s can shed some light on how that financial decision may impact your finances in the future - and for how long.
But smart borrowing goes deeper than simply making sure you are applying for just the right amount of money. Here are our 5 tips to help you be the best borrower possible.
#1: Get the Best Rate
At LendingArch, we understand that you want the best deal and interest rate on every loan or credit card that you obtain. And we want that for you, too!
Using LendingArch to find and compare loans allows you to clearly see your options and gives you the opportunity to make an educated decision.
But more than saving you some major cash over time, a better rate helps you be a better borrower. With more options (like, for example, being able to compare whether you want the lowest rate possible, or a higher interest rate but fewer payments that result in an overall loan amount in the long term), there is a greater chance that you will be able to make your payments month after month, on time (or, heck, maybe even early).
Plus, each on-time payment will be reflected on your credit history, driving down the rates of your future personal loans.
#2: Boost Your Credit
Using personal loans the right way can boost your credit.
Here’s how: Don’t just pay your loan on time, but pay a little extra toward it every month. Even if that is just $15 more than the minimum, you can greatly impact your credit and pay off your principal balance faster.
Our loan calculator and comparison tool will allow you to view projected monthly payments, allowing you to be paired with a repayment amount that fits your monthly budget. We recommend finding one that is slightly lower than your monthly threshold, allowing you to pay a little extra and have some cushion, in case unforeseen expenses come up in the future.
Then, you can set up auto-pay and have peace of mind knowing that you are paying off debt and building your credit at the same time.
Who doesn’t love that?
#3: Don’t Go Overboard
Make sure not to go overboard when applying for loans - both in terms of how much money you are looking to borrow and how many applications you are filling out.
Multiple hard inquiries on your credit over a short period of time causes a red flag on your credit score and can result in a lower credit score and even future denials.
Rather than applying for several loans, with no guarantee or reassurance of acceptance rates, we aim to provide you with the information you truly need to make your decision. By inputting a little bit of personal information - like your income, monthly expenses and reason you need financing - you can easily compare multiple loans and rates.
LendingArch allows you to see the difference in rate percentages, as well as what loans you’re most likely to get approved for - without ever making a hard inquiry.
#4: Understand The Loan Terms
Before jumping into any personal loans, make sure you understand the terms of the loans.
Are there late fees? What’s the grace period? When does interest compound? Is there a fee if you pay off the loan earlier than expected?
Never assume that the terms of a loan will be the same as other personal loans you’ve had. Make sure you read the fine print!
We do our best to ask lenders the important questions for you, breaking down the terms of multiple loans in an easy to understand way, but you should always reach out to a customer service representative if you have any questions that need to be answered.
#5: Don’t Take More Than Needed
We know, it can be tempting. You want to take that amazing vacation, go on a huge shopping spree or plan your fantasy wedding.
We’ve said it a few times now, but don’t take what you don’t need.
In fact, as yourself, “Do I really need a personal loan for that?” and only take what you absolutely need: financing for educational purposes, help with medical expenses, a family emergency, preparing for the arrival of a new baby or putting a down payment on a necessary purchase can all be considered good reasons for securing a personal loan.
Unfortunately, that trip to the Maldives is not.
For non-essential purchases, consider setting up a savings account that will give you interest on your balance. Yes, you may have to put off your plans a bit, but you’ll be able to enjoy your vacation even more knowing you won’t be paying it off for years to come.
Start Using Personal Loans to Your Advantage
It is true. When done the right way, you can truly use personal loans to your advantage.
If you start borrowing more than you truly need, though, you can easily put yourself in more debt by missing payments you can’t afford or paying extra in interest.
We don’t want that for you.
That’s why we share the information and tools you need to make informed financial decisions. We’ll never make you rush into an offer, apply for a loan that isn’t a good fit, or make unnecessary inquiries on your credit.
Are you ready to be a brilliant borrower?
Answer a few simple questions, use our loan calculator to see projected payments and payoff amounts and be paired with your perfect perfect personal loans today!