Applying for a loan at a credit union is a serious decision because you will have to be committed in repaying it. It is wise to ask a lot of questions to find out as much as you need to know about the loan prior to applying. By asking questions, you will be able to make a clear decision and know whether the loan is suitable for you.
You must ask the credit union representative what are the factors that they look at when deciding whether to approve your loan. There may be some requirements that you have to meet prior to getting approved for the loan for example credit score and income. You can get advice from the credit union on whether they would recommend the loan or your needs. You can also ask them to suggest other loans that they are offering that might be suitable for you.
Once you know what is the loan approval requirements, the next question you must ask is how much interest rate the loan charges and whether the interest rate is fixed or variable. All loans have interest rates and it serves as the fee for borrowing money from the credit unions. You can ask the credit union representative to give an estimate on the interest rate that you will be charged for the loan. In this way, you will know whether you can afford the loan and make your budget plan accordingly.
You must find out from the credit union how they determine your interest rate. Fixed interest rate means the interest rate will stay the same throughout the loan term while variable interest can increase at anytime which can subsequently increase your monthly bill. If the interest is variable, you must ask what influence the fluctuation of the interest rate. You have to find out how much the initial monthly payment will be and how much is the maximum interest rate you can be charged.
You have to find out about the loan term, which is the amount of time that you have to repay the loan. Shorter loan terms means higher monthly payment but you will repay your loan faster. On the other hand, higher loan terms means lower monthly payment but it will take a longer time to repay the loan. You should also find out if there is a grace period and how long it is so that you know how many days you have to pay in the event that you can’t meet the repayment on the due date. Besides you must check if the personal loan charges a prepayment penalty. Prepayment penalty fee is a type of fee that is charged when you fully repay the loan earlier than the loan term.