How to Compare Signature loans
Comparing loans from multiple lenders can be a tedious process. When you start doing your research, there are more than a few things you’ll want to look out for (APR just being one of them).
What credit scores do they normally work with?
Lenders who don’t advertise that they only lend signature loans out to people with poor credit will likely expect you to have a good to excellent credit rating. On the other hand, lenders who advertise that they routinely work with borrowers with fair to poor credit usually only offer loans with higher APRs. Know what you’re getting yourself into, so you’re not disappointed or surprised after going through the application process.
Determine what APR you would qualify for.
Whatever APR you are quoted is directly related to your credit score, monthly income, and credit history. Shop around and compare the APRs you are quoted. However, don’t just choose a lender based off of the APR. Next you need to look at the loan term—meaning how long you’ll have to repay the loan after it has been given to you.
Determine the loan term.
Is the loan term 90 days? Or is it six years? If the loan term is longer but you have a higher APR, that likely means lower monthly payments. Yes, you will pay more over time with a lower payment, but the chances of you not having enough money every month to make a payment is lower. Missed payments hurt your credit score every time. Plus, if the monthly payment is higher and you miss one because of insufficient funds, it will be harder for you to catch up if another high payment is just around the corner.
How much do you need? How much are they offering?
You don’t want to take out multiple loans from multiple lenders. That’s multiple payments you have to remember, and if you get behind paying everyone that’s twice the damage your credit score will take. Dings on your credit stay there for seven years, which can be a long time if you think might need a new car or house soon. Find a lender who is willing to loan you the right amount of money for your particular life situation. It will save you the hassle of applying to multiple lenders, and will do less damage to your credit score (because you won’t have a lot of hard credit inquiries).
Read through customer reviews.
If you’re having trouble nailing down the right lender, read through some customer reviews—but do so with a pinch of salt. Most people are only inspired to write a review if they have a bad experience, and when it comes to lenders, this means people write to complain when they start getting phone calls after they missed a payment. These can’t be entirely discounted, however. How a company deals with delinquent payments is indicative of the type of company they are overall.
Can you pay your bills online?
It may seem strange that in this day and age any company would not be able to take payments online (especially those with websites and online applications). Surprisingly, they do exist. If a lender does not offer online payments, it’s usually because they are trying to get more money out of you. These companies take payments over the phone, but charge a fee for doing so. There’s no excuse for this in today’s world. Find a lender who offers online payments, and who doesn’t charge you convenience fees.
You want a balance.
You want a lender who offers you a solid APR with a reasonable loan term, and one who won’t nickel and dime you throughout the whole process. They are many reputable companies out there, but there are some that should be avoided, too.