Sometimes cash is tight and you need funds right away. A personal loan is designed to help fill in the financial gap. You can ensure you’re getting budget-friendly rates and terms by avoiding costly mistakes during the application and payment process. Here are several common ones to avoid.

5 Personal Loan Mistakes to Watch Out for

1. Borrowing More Than Needed

It may be tempting to request more funds than you need. Borrowing a higher amount can potentially increase the interest accumulated during the repayment period. You could end up paying much more than your initial personal loan request. Commit to borrowing only the amount you need so that you can pay off the balance faster.

2. Not Being Aware of Fees

Most personal loans come with some fees. Depending on the lender, these can include an origination fee, which is generally an administrative cost to process the loan. There could also be a prepayment fee if you pay off the balance early. Be sure to review all the fees that come with the loan first so that you won’t be hit with any surprises later.

3. Applying With Multiple Lenders

If you apply for several personal loans with more than one lender within a short period, it could hurt your credit score. Most lenders check an applicant’s credit history. Each inquiry can potentially lower your credit score by a few points. Try to avoid applying for multiple loans at one time. Give yourself at least six months to one year between each application. 

4. Making Late Payments

Once you’re approved for a personal loan, stay current on your payments. Late fees may be charged if you miss any. In addition, a missed payment could hurt your credit. To improve your credit score, make consistent and on-time loan payments. If you anticipate trouble making one, be sure to contact your lender in advance. Some will provide an extension. 

5. Failure to Read the Loan Agreement

Before signing the personal loan contract, read its terms. Not doing so can create costly financial outcomes later. Pay special attention to terms such as the interest rate and the loan repayment period. The contract should also list all penalty fees, including those for missed or late payments. If you’re not sure about the information in your loan agreement, ask for clarification before signing the document. 

By doing a bit of homework, you can apply for a personal loan with confidence. Coastal Finance Company in Savannah, GA, is the area’s premier resource when additional funds are a must. The locally owned lender offers loans up to $5,000 and decisions are made in-house, typically in less than one hour. You can get started today by completing the secure and confidential application online. You can also stop by the office to apply in person. If you have questions, call (912) 303-9979 to speak to a friendly loan officer.