When you apply for a job, the employer may request an interview. It’s a chance for them to ask you questions — but it’s also a critical opportunity for you to learn more about the company and decide if it’s a fit for you. Applying for a loan is similar. Although lenders will analyze your information to determine whether or not they see you as a suitable borrower, you should also take the time to review them before signing any dotted lines. Because lending and borrowing is a relationship, and you should feel good about who you’re working with.
What to look for in a lender
Whether you’re financing a home improvement project, fertility care, or unexpected dental work, it’s a good idea to shop around with a few different lenders when taking out a personal loan so you can get the best interest rate. But as the borrowing landscape continues to rapidly shift toward digital-first lenders, low rates are just one of several factors you should consider.
Scoring a low interest rate is a win, but it’s important to know whether that annual percentage rate (APR) might adjust during the life of your loan. Variable APRs are subject to change, meaning you could begin with a low rate only to have it later skyrocket — increasing the interest on your monthly payments. A fixed rate APR, which Ally Lending offers, gives you peace of mind knowing your rate will not change and neither will your payment amount.
Online account management
Your lender should reflect the increasingly digital world we live in, and that means providing you the option to fully manage your account online. With digital access to your loan details, you can easily review your loan terms, payment options, and outstanding balance at any point (no digging through desk drawers or filing cabinets required). And if you have more than one loan from the same lender, you can stay on top of both in the same place.
Online payment options
Maybe you like to keep it old school and stick with paper checks and snail mail when it comes to paying your bills. But still, it’s smart to find a lender that provides a secure and convenient way to make your payments online (you know, for those times your checkbook is nowhere to be found). Plus, having this option typically means you can enroll in automatic payments, so you won't have to worry about missing a due date and potential late charges.
Speaking of fees …
Low to no fees
Always be on the lookout for sneaky fees and hidden expenses when comparing lenders. Some charge a flat fee (typically $25 to $50) simply for applying for a loan, regardless if you’re approved. Another charge to look for is an origination fee, which usually ranges from 1% to 6% of the loan amount. Finally, make sure you are aware of any prepayment penalties, teaser rates, annual membership and/or maintenance fees, as well as late charges.
Note: With Ally Lending, you'll never have to worry about any hidden fees or prepayment penalties.
Dedicated customer support
Whether your payment won’t go through, you’re having trouble accessing your online account, or you just have a question about your loan, you should feel confident your lender has your back. Look for loan providers that offer dedicated customer support (and won’t leave you listening to elevator music on hold for hours on end).
Tips for researching lenders
When you’ve decided a personal loan makes sense for your financial situation, it’s time to find a lender that does, too. With banks, online lenders, and credit unions to choose from, you have a lot of options. Luckily, now you know what to look for.
One way to compare different lenders is to start with online searches based on different criteria. For example, a search for “Personal loan lenders with low to no origination fee” will help you easily identify lenders you may or may not want to work with. You can also browse credible online sources that compare different lenders’ fees, interest rates and more.
Take a look at a lender’s website (Is it easy to navigate? Does it have the information you’re looking for?), but also take the time to read reviews and learn about other people’s experiences with that institution. You might also reach out directly to someone you know who has borrowed from a lender for another perspective. Remember, when it comes to your money, you can never ask too many questions.
Be a confident borrower
Borrowing and lending go hand-in-hand, so it’s important that you do a background check on your lender just like they will for you. Knowing who you’re working with — and if they offer the services, accessibility and options you want and need — will help ensure you have a smooth loan experience that gets the job done.