If you are about to take out a personal loan, then you should make some research to learn which is the best option for you. In order to save you some time, take a look at the personal loans you should never pay!
There are many reasons why you may need to take out a personal loan at some point in your life. Maybe you will need to pay for a new car or your kid's braces. In these cases, personal loans are the most popular option as they usually offer much lower interest rates than other methods.
Unlike credit cards, personal loans come with fixed interest rates, fixed repayment periods and fixed monthly payments. That's why personal rates are considered a predictable and suitable option.
Another good news about personal loans often come without fees. Nevertheless, these types of loans are only available for those with good, very good or exceptional credit or FICO scores over 670.
Those with good or great credit will be able to qualify for personal loans that don't add up fees that make the loan more expensive as time goes by. So, take a look at those fees you should definitely try to avoid!
1. Application fees
Bear in mind that some personal lenders may charge an application fee for their products. These types of fees are non-refundable and are destined to cover the processing costs of the application and setting up of your loan.
Although most lenders don't apply this fee, remember you should check this before taking out your personal loan.
2. Origination fees
As its name suggests, these are fees assessed to originate your loan. Many lenders charge this fee. It can vary according to the lender and also depend on your credit score and other factors.
In some cases, it might be as high as 8%! So check this fee before you apply for a loan.
3. Prepayment fees
These kinds of fees are applied in those cases in which borrowers pay their loans off early.
So, while you are doing some research, remember to look for those personal loans that won't penalize you for prepaying it.
4. Late fees
These types of fees depend on your behavior. Bear in mind that most lenders charge late fees if you don't make your payment on the due date, so make sure you have a payment plan!
You can make early payments, set up a monthly alarm or even set the payment on auto-pay. Choose the best method that helps you pay on time.
5. Returned check fees
There are personal loan lenders that charge an extra fee for check processing in those cases in which your check has been returned. Although it will depend on the lender, these fees are usually around $15-$25 per returned check.
As most of the lenders charge this type of fee, you can avoid them by committing to always have funds in the bank to cover your loan payment.