Q. I continually get internet pop-up ads for financial loans. I am considering a loan, but not sure who to contact. What advice may BBB provide?
A. If you need some extra money for a major purchase, home repairs, or even to pay off high-interest debt, you may be considering taking out a loan. Don’t get yourself into trouble by getting a loan without thinking it through and doing the right research. Better Business Bureau has these tips for you:
Jim Winsett of the BBB. Maintain a Good Credit Score. Different lenders will have different credit score requirements for issuing loans. If you are not confident about your credit score, try to build your credit rating before you apply for a loan. Using your credit card will improve your credit score if you use it responsibly, so charge small purchases that you are positive you will be able to pay off at the end of the month. Do be aware that every time you apply for a loan, there is a note left on your credit score. Lenders checking your credit score can see if you have multiple loan applications, which may give the impression that you are unreliable.
Do your Research. The first things to find out about any loan are the annual percentage rates (APR) and the total amount repayable (TAR) from each lender you are considering. Ask about the monthly payment and see how adjusting the length and amount of the loan can change the payment. Also, ask if it is a fixed or variable rate loan. Make sure you understand all potential fees, including if there is a fee for early repayment of the loan. Find out if you will be able to refinance the loan if rates change.
Get a Fixed Interest Rate Loan. By getting a loan with a fixed interest rate, the lender will not be able to raise the interest rate throughout the loan. When you are locked into a fixed rate, you are protected against fluctuations in the economy when most lenders raise interest rates. If the interest rates decrease below your fixed interest rate, you can look into refinancing as an option to pay a lower interest rate.