When finding private lenders for personal loans, consumers should avoid loan brokers and deal directly with lenders, shop around and compare loan deals, and read all the fine print in loan terms, reports Fox Business. They should also be wary of extra fees and check the accuracy of their credit scores, which affect loan rates. Additionally, consumers should watch out for signs of loan scams, warns the Federal Trade Commission.
Factors to keep in mind when considering offers from private lenders include monthly payment amounts, repayment terms, and origination, prepayment and late payment fees, explains Fox Business. Fixed interest rates remain the same throughout the period of the loan, while variable rates may start low but later go up. Because credit scores can significantly impact loan interest rates, consumers should maintain responsible credit habits during the period leading up to the loan and verify that there are no mistakes on their credit reports that could affect their credit scores.
Consumers should avoid lenders who claim to guarantee loans before checking the credit history of borrowers, cautions the Federal Trade Commission. They should also avoid lenders who offer their services by phone or use names similar to well-known banks or financial organizations. All legitimate lenders should be willing to clearly disclose their fees and do not ask for money upfront. Consumers should check the state registration of possible lenders with the state attorney general's office.