Money is scarce. Needs are unlimited. This creates a deficit. An individual is therefore forced to look for money elsewhere to cover this gap. The bad news is this money comes at a cost. Interest is charged to cover inflation and other charges. Prudence demands one should go for the cheapest loans. This will make it easy for you during repayment. This article gives you smart ways on how to look for a reliable lender in 2020.
You will never go wrong with references. This is especially so if the person referring the lender to you is a family member or a close friend. Make it clear to them you are looking for a reliable lender. A loan provider who charges a small interest rate and understands his/her client in case they default.
2. Search online
The Internet has made the world a global village. This makes it possible to search for anything you wish online. As long as you do your search in the right way, be sure to find what you want.
Finding the lowest interest personal loan and reliable lender online is more comfortable than most of the other methods. Why? The lender referred to you might not be the person you are looking out for. Besides, online lenders have their profiles well displayed on their websites and online reviews.
The beauty of online reviews is it reveals every detail about the lenders. If there is a question of unreliability, previous clients giving reviews will point it out. A word of caution for you is you should not ignore any red flag you see on a lender. Take any compliment or complain put on a lender seriously.
By now, you know one or two lenders. These are loan providers you may also depend on. Before choosing who will be your lender, ensure you do a background check. Find out what interest rates these lenders charge. Furthermore, seek to know if there are hidden charges or any new costs you do not know about.
It should not end at the cost of the loan. Ask around to know if there are any pointers of unreliability. In case there is, do not hesitate to walk away.
4. Look for lenders giving loans with low APR
The Annual Percentage Rate (APR) includes interest rate and all other charges a lender serves you. This is the easiest way to tell the actual cost of a loan. Reliable lenders tend to offer a lower APR. Although this depends on your credit score. If you have a high score, then you will most likely get a low APR rate.
This, therefore, requires you to have a good credit rating. With a poor credit score, you will find a reliable lender, but you will not be able to secure a loan with them.
The above four tips are ways to find reliable lenders. Below are some of the specific qualities you should look for in a lender.
The purpose of a lender is a clear indicator of their reliability. If the lender’s vision statement talks about empowering small and medium enterprises (SMEs), then clearly that lender is not meant for you if you are looking for a personal loan. Such a lender has tailor-made their products to suit businessmen. Therefore, you may end up paying more interest rates that may harm you.
A good example is the shylocks. These lenders may or may not be allowed to operate in your jurisdiction. If they do, then you can only do business with them if you are running a profitable business. If you need a personal loan or a business loan for a non-profitable business, then this is a no-go zone. For a personal loan, you need low-interest loan rates. Anything else will mess you up big time.
Treatment to previous borrowers
It is crucial to find out a lender’s tolerance level at earlier borrowers. A reliable lender sticks by his/her borrower’s side irrespective of the circumstances. Envision a situation where you are unable to repay the loan. If the lender has auctioned some of his/her clients’ property previously, then be assured that is the fate that awaits you.
A lender with a high tolerance level to defaulting or late repayments is a reliable one. That is an assurance that even if things were to go south, he/she would be there for you. On the other hand, a lender is not to be relied on if he/she mercilessly throws the fate of his/her clients to the wrath of auctioneers.
Profit or service?
Some lenders open service to help the community grow. That is why they will reason and stay with you, even during difficulties. The lender will understand when things are not alright and will try to adjust the repayment rates to suit your ability.
Other lenders are all about making profits. You need low-interest loan rates to grow as an individual or as a business. With lenders out to make profits, be guaranteed you will be charged extremely high-interest rates. The APR and interest rates are an easy way to tell whether a lender is after profits or is out to serve its clients. A reliable lender is one who puts service first and profits after.
The Bottom Line
2020 will come with its financial surprises. New lenders with low-interest loan rates and those with higher rates will spring up. There will be new regulations in place and intense competition between lenders. While this competition will work for borrowers, lenders may also collude to increase interest rates.
Looking for a reliable lender starts with you being reliable yourself. Then, you will need an impressive credit score. With that, you may proceed to do your search. It may be online or physical. Do not forget to look at the lenders you already know. Make sure you compare all your options before settling for the most reliable lender. Let the lenders’ APR be your first criteria for comparison.