Unsecured loans are widely popular in Utah. As their name suggests, they require no collateral, so you can get instant cash in exchange for a promise to repay on time. These cash advances have become an alternative to payday loans because they involve less risk and can take as fast to qualify.
Understand, however, that a Provo, Sandy, Taylorsville, or Salt Lake City signature loan is foolproof. It is prone to misuse, or, even worse, abuse. Do not let it create a false sense of security, for it can devastate your credit and further ruin your finances if you do not use it properly.
Signature loan borrowers make silly mistakes all the time. Below are the most common, so learn from them before applying for this unsecured financial product.
Borrowing When It Is Not Necessary
A signature loan must be used in moderation. Actually, it should not even cross your mind unless you in a desperate situation. It usually attached to high interest due to its lack of a collateral requirement, so it is not exactly a good debt to acquire when you are not dealing with an emergency that merits quick cash.
Paying Attention to Interest Only
The interest rate is generally considered by many as the ultimate cost of borrowing. In reality, it is not. Interest rates make it easier to compare loans, but they do not often paint the entire picture.
To know how much a signature loan truly costs, know about its annual percentage rate or APR. It is expressed in a percentage, which illustrates how much it is to borrow a loan for the entire year while taking all applicable fees into the equation. If you have pay other charges on top of the interest when borrowing money even when you settle the bill on time, then the interest rate does not represent the overall cost of borrowing.
Ask different lenders to show how the APRs of their loans are being calculated, so you can compare their products accurately.
Trying to Take a Lender for a Ride
Lying on your application is a huge no-no. It constitutes fraud, and you can go to jail for it. Signature loans usually have laxer requirements, but when it is not going to be good for you if a lender discovers that your credentials are exaggerated.
Saying Yes to the First Willing Lender
Shopping around is healthy, no matter how bad or how soon you need the money. The competition among lenders is fierce, so use it to your advantage by negotiating for a more favorable interest rate.
Getting Sold on Personality Alone
An agreeable lender is more desirable to do business with, and it is usually good to trust your gut if you feel you can trust the person. But your gut can’t read the contract, so do not rely solely on intuition.
Review all words written in the agreement, and see whether are consistent with the promises made to you. If you are talking to a reputable lender, they should match.
A signature loan is a useful tool to survive a severe financial period if you are a responsible borrower. But if you are not, applying for it may be digging a deeper hole.