From sudden layoffs to unexpected medical needs, many factors can make your financial situation difficult to predict. Fortunately, if you need money in a relatively short amount of time, you can turn to a local bank for a personal loan. But while these funds can keep you out of a bind, it’s important to keep in mind that repayment is a major responsibility that carries consequences if you don’t comply. To help you get the most out of this financing option, here are a few do’s and don’ts to follow when taking out a personal loan.  

Do:

Research your credit score.

In many cases, the better your credit score is, the more attractive your personal loan terms will be. Before you apply, look over your credit report to assess your rating. If there are errors, you can correct them to boost your score.

Consider all financing options.

Personal loans are usually reserved for emergency expenses—such as those related to healthcare, car repairs, and daily essentials.

If you need financing for a less urgent expense, ask your bank about alternative options that may carry more attractive terms. For instance, an SBA loan is more ideal if you’re an entrepreneur launching a new enterprise.  

Calculate your future payments.

Soon after initial funds are disbursed, you will enter the repayment period. Calculate how much and how often these payments will be. If it won’t fit in your budget, a personal loan may not be a good option.

Don’t:

Rush through the terms and fees.

When you need quick cash, you might also be quick to sign on the dotted line. But rushing through the process may leave you with unfavorable repayment terms and fees—such as those that apply to early repayment or loan origination.

Borrow from predatory lenders.

Some lenders may seem like they offer easy financing but will subject you to terms that make it increasingly difficult to repay in a reasonable amount of time.

Rather than applying to unestablished creditors online or visiting a check-cashing business, try to get financing from a bank, as these institutions must follow a series of legal guidelines designed to protect consumers.

Miss payments.

Once you’re in repayment, mark the due date on your calendar and stick to it. If you miss a payment, you may face late fees, as well as credit score problems.

Serving residents of central Kentucky, Magnolia Bank is a trusted resource for personal loans in the Larue County area. Committed to expanding financial knowledge throughout the community, this team of professionals will work with you to explore lending options that best fit your needs and budget. They are also recognized for their favorable financing terms, whether you’re getting a personal, business, or mortgage loan. To learn more about their products and services, visit this personal banking establishment online. If you have questions about applying for financing, call (270) 358-3183.