Before you sign on the dotted line for a personal loan, it can help to consider the following steps.

Compare Interest Rates

When shopping around and comparing personal loan offers, among the first things to assess are interest rates. 

Personal loan interest rates depend on the lender and your credit profile. Generally, borrowers with good credit scores qualify for the lowest interest rates. Interest rates are typically expressed as an annual percentage rate (APR), which includes both the loan rate and any fees associated with it. 

Even a small difference in loan rates can significantly affect the total amount you repay. So look for loans with low interest rates and compare the APR to see the total sum you could be expected to pay.

Review the Fees

Personal loan fees can include origination fees, prepayment penalties and late payment fees.

• Origination fees: These are a percentage of your loan amount. They’re deducted from your loan balance before it’s deposited in your checking account. 
• Prepayment penalties: If you pay off your personal loan early, such fees may get charged. 
• Late payment fees: These costs are added on by your loan provider if you have missed payments or make a payment after the due date.

Pick the Right Repayment Term

Personal loan terms can last anywhere from a few months to several years. The term of the loan will affect your monthly payment amount and the total amount of interest you’ll pay over the life of the loan. Choosing a longer loan term will lower your monthly payment, but it also means you’ll end up paying more interest over time.

Consider Repayment Flexibility

Look for a lender that provides flexible repayment options, such as the ability to make extra payments, change your payment due date or defer payments due to financial hardships. Having flexibility can help you manage unexpected changes in your financial situation and avoid late fees that could ultimately hurt your credit.

Look for Good Customer Support

It can be beneficial to choose a lender that has a good reputation for customer service and support. It’s important to be able to get in touch with someone should you have questions or concerns about your loan. 

One way to judge the level of customer support you’ll receive is to call up a lender and ask them questions before you take out a personal loan. 

How long were you on hold? How responsive was the customer service agent with whom you spoke? How was the overall experience? These are good questions to think about as you look for a personal loan provider with good customer service. 

You can also go to trusted sites like the Better Business Bureau (BBB) and Trustpilot to read customer reviews about the company you’re considering. 

Use This Checklist To Evaluate Personal Loan Lenders

Here’s a step-by-step checklist you can use to evaluate lenders and find a personal loan that fits your budget:

• Determine how much you need to borrow: Before you start looking for lenders, determine how much money you need to borrow. This can help you narrow down your search and find lenders that offer loans in the amount you require.
• Check your credit score: Your credit score is a significant factor that determines the interest rate and loan terms for which you qualify. Grab a free copy of your credit report from Equifax, Experian and TransUnion (the three major credit bureaus), and use it to check your credit history and score.
• Get preapproved: Getting preapproved for a personal loan can help you see what interest rate and terms you qualify for. This can help you narrow down your search and find the best personal loan for your needs.
• Read the fine print: Read the loan agreement carefully to understand the interest rate, fees and repayment terms. Make sure you understand the total cost of the loan and any penalties for late payments or early repayment.
• Apply for the loan: Once you have found a lender that meets your needs, fill out the loan application and provide any required documentation. You’ll likely need to show proof of income and verify your identity.
• Review the loan offer: After you apply for the loan, the lender provides you with a loan offer. Review the offer carefully to ensure that it meets your needs and that you understand the terms.
• Accept the loan: If you’re satisfied with the loan offer, accept the loan and sign the loan agreement. 
• Repay the loan: Once you’ve accepted your loan, you will start to make payments. You can manually submit your payments each month or set up auto-pay to ensure your bill is paid on time. That way, you avoid late fees. 

If you need help with this process, you can consider contacting a nonprofit credit counseling agency that can help you create a realistic plan to pay off your debt.