Choose a responsible lender.
Easy and right don’t always go together. Is the lender making offers that seem too good to be true? Work with a lender who asks about your income, payment history, and takes the time to walk you through the process and nuances of the loan. If you’re paying upwards of 100% interest on a loan, you could end up in a worse financial position than when you applied for the loan!
Don’t take on more than you can afford.
A safe, responsible lender will want to ensure you are not creating undue financial strain on yourself by taking on a loan you can’t afford.
Use a loan to obtain financial mobility and build your credit score.
Building a credit profile is a central part of financial success. Since payment history can be important to creating a good score, paying your loan on time should be a priority. This can also help you avoid late fees and other charges from your lender. By paying off credit card debt with a personal loan, you can reduce the amount of revolving debt you owe. This could lower your credit utilization ratio and raise your credit score. Lastly, by paying your loan on time and working with a lender that voluntarily reports to credit agencies, you can establish a healthy credit profile, which can help you do things like buy a house.
Ask about fees.
As a borrower, you should be aware of all fees associated with the loan. Safe, responsible lenders will be transparent and upfront about the fees they charge and typically offer fixed interest rates, fixed monthly payments and no pre-payment fees.