Top 10 Questions to Ask When Getting a Loan
The decision to take out a loan comes with obligations and commitment, so it makes sense to thoroughly research your options. At Santander, we have multiple loan options to suit each consumer and financial situation. But, in order to get started there may be a few questions that you need to ask yourself as well as your lender.
Here is a list of questions to ask before getting a loan:
How much should I borrow?
When do I need this money?
What do I need to take out a loan?
How do I know what my current credit score is?
What is the interest rate on the loan?
How does the loan prepayment work?
What is the term of the loan?
Are there any fees?
Does the loan require a cosigner?
Is this a trustworthy lender?
The minimum and maximum borrowing limits are set by each lender and the amount of your personal loan limit depends on your creditworthiness. Ask yourself about your needs. If you’re taking out a loan for something just nice to have, like a vacation, you might want to consider building towards that goal by opening a high-interest savings account. However, if you’re consolidating debt or covering unexpected expenses, a personal loan may be in your best interest. The amount you request when taking out a personal loan should be limited to your actual need. Borrowing more money than you need ends up making the loan more costly over time. To calculate how much money you should borrow, add up all your debts or anticipated expenses to come up with an ideal loan amount.
Depending on the loan amount and application time frame, there may be a waiting period before you receive funds. Some loans process within 48 hours, but others may take a bit longer. Take these time periods into account when deciding which loan product to apply for.
Make sure you know what documentation to bring with you. You will need your social security number and basic employment and income information to apply for a loan with Santander. Once we receive the application, we will determine if any additional information is required. With any lender, you’ll need to verify your identity, provide your social security number, provide proof of income, and state the purpose for your loan.
Your credit score is a major factor in determining whether Santander will approve your loan application, since credit is an indication of your ability to responsibly repay the loan. There are different credit scoring models, but most have a range of scores from 300 – 850. The higher the number, the more creditworthy you appear. If possible, check your credit report before applying. You are entitled to receive a free copy of your credit report from the three major credit reporting bureaus once every 12 months (they may charge a fee to provide your credit score). Dispute any inaccuracies in your credit report to ensure the most accurate representation of your creditworthiness.
Depending on your credit score and other factors, the interest rate may impact your decision to borrow. Think of an interest rate as an expense for borrowing money from a lender. The amount of interest is bundled with your payments. Be sure to ask about how the interest rate affects the cost of borrowing the loan before signing the paperwork.
Your repayment plan, usually monthly, will impact your day-to-day finances. Is it set at a rate you can handle without worrying about missing a payment? Your monthly payment will depend on the amount of the loan, interest rate, and term of the loan. Make sure you know your monthly due date and when those payments start. Additionally, you should also ask your lender if there are penalties for early pay off. Santander Personal Lending products have no prepayment penalties.
It’s important to consider the term of the loan and whether it works for you in the long run. If you don’t mind paying a larger monthly payment, you may want to choose a shorter timeline. On the flip side, taking out a loan with a longer repayment timeline usually grants a smaller, more affordable monthly payment.
Some lenders offer personal loans that include origination fees, which are a percentage of the loan amount. Some banks also call these closing costs. Make sure to factor these in to decide whether a personal loan is worth it. Santander Personal Lending products have no origination fees or closing costs.
Some lenders may allow a cosigner on a loan, which could help an applicant get approved for the loan. With a cosigner, if something happens and you are unable to make payments, the cosigner can be held responsible for repayment of the loan. Santander Bank does not have cosigners on loans, but does allow co-applicants. With a co-applicant, both people are equally responsible for the loan.
Well-known banking institutions, like Santander, are guided by federal regulations and provide banking products that adhere to the highest quality standards. However, not all lenders have an eye to your financial security. Throughout the process of shopping for a personal loan, watch out for the following warning signs of predatory lenders:
- No-credit-check loans
- Unclear fees and hidden costs
- High-pressure sign-up processes
If you’re feeling pressured to apply for a loan, the fees aren’t spelled out in your contract, or your lender makes promises that seem too good to be true, you may be dealing with a predatory lender.
After reviewing these questions to ask before getting a loan, you may decide a personal loan is right for you. At Santander, we make it easy, with a discount for automatic deduction from your Santander checking account, no application fees, and no collateral required. Apply for a personal loan today.
You can also contact a Customer Service Center Advisor today to start a conversation about borrowing options at 877-768-2265 from 6 a.m. to 10 p.m. ET, seven days a week. Please note that this information is intended for Santander customers in the United States; different rules and regulations apply to our customers outside of the United States.