Getting a personal loan is a huge step, and as a rule of thumb, don't get it unless you really need it and it could return rewards like opening a business. Here are a few more personal loan tips to help you avoid debt when you apply for a line of credit.
1. Choose the lowest rate in the market
Usually near the holidays, around September to November, banks offer promotional rates on loans. Always compare one bank to another and don't be decieved by big gaps between the rates by asking if their advertised rate is a "flat rate/add-on rate" or an "effective interest rate." Usually, some banks advertise the add-on rate because the number looks smaller than the effective interest rate. Be careful. You can compare with GoBear, which converts all rates into EIM so that it is easier for you to see the exact rates.
2. Inflation rate x Interest Rate
Did you know that you must consider the inflation rate as well, when paying off your loan? Inflation devalues your money, but salaries increase during these times. If you take a loan before the inflation, then the phenomena is a beneficial one given that you may have the same debt, but you now have more money to pay it off.
3. Know that you can get a loan to pay off all other lines of credit
This is called debt consolidation, a service available from most banks. If you've racked up debt on several loans, you can ask one bank to accept your loans from other banks so that you can pay it under 1 interest rate, which is usually lower.
Want to have more financial tips when it comes to personal loans? Compare with GoBear for the best rates and honest reviews.