How to secure a short term loan but avoid high APR charges

Secure a Short Term Loan and Avoid High APR Charges

Understanding how to secure the right loan is one of the most important things that a person can do in order to secure their own financial well being, both now and in the future. When trying to secure an installment loan or some other type of short-term loan, one of the biggest concerns is the APR, or annual percentage rate. A high APR means that a person has to pay back more money in order to pay off the loan while a lower APR means that they are charged far less in finance charges. This in turn can have a dramatic impact on the cost of the overall loan. As a result, it is important to consider how to secure a short term loan without paying a high APR.

Have Good Credit

This is one of the most important things that a person can do to secure any type of loan, including a short term loan, without paying a high APR. Most lenders will check you consumer fico score, which is derived from transuion, experian and equifax and now many will use a formula called the 9fico which helps them understand your payments and credit histories. Many times, the amount of finance charges that a person pays are tied specifically to that particular loan. However, a person that has less than stellar credit may only qualify for those types of loans that are available with outrageous APRs. Many times the APR on loan of this type can be as much as 300%, meaning that a person will pay all of the money that they borrowed back and then pay that same amount three more times before the loan is completely paid off. On the other hand, a person with good credit qualifies for a wide range of loans and this means they may pay an APR of less than 20%.

Research Loan Options

This is also tied to the APR that is associated with the specific type of loan. It is important to research all of the options that are available and choose the loan that is available from the lender that will charge the lowest APR while still meeting the needs of the individual that is applying for the loan. If a loan is available that has a lower APR than another loan that is being considered and everything else is similar, it is important to choose the loan with the lowest APR. This is true even if that means that the payment might be moved up by a week or two when choosing a particular loan.

Pay the Loan Back as Quickly as Possible

Many loans can be paid back in full without any penalty whatsoever. If that is the case, paying back the loan as quickly as possible can go a long way toward reducing the finance charges that are associated with it. This can save an individual several hundred dollars when all things are said and done. Of course, it is important to make sure that there are no penalties for paying the loan off early before actually doing so.

Following these tips will help keep finance charges to a minimum, even on short term loans. It is important to do so because there is simply no need to pay more money than necessary to pay a loan back in full.