If you need to borrow money to consolidate credit card debt, make home or auto repairs, or move across country, a personal loan can help cover your expenses.
Most personal loans are unsecured, meaning they don’t require collateral like a house or car, and typically have higher interest rates than secured loans.
The FTC recently filed a lawsuit against Lending Club, a company offering personal loans online. According to the FTC, Lending Club has deceptively marketed loans by promising consumers “no hidden fees” but nevertheless charges a hidden up-front fee. Lending Club has told consumers they will get a loan of a certain amount – say $10,000, for example. But when the loan shows up in the consumer’s bank account, it’s for just $9,500. That’s because Lending Club deducted a $500 up-front fee, even though it promised not to charge hidden fees. The complaint also alleges that Lending Club has told consumers they have been approved for loans when they have not, makes unauthorized withdrawals from consumers’ bank accounts, and failed to properly provide customers with required privacy notices.
If you’re thinking about applying for a personal loan, take the following steps:
- Shop around. Different lenders may quote you different rates and terms, so you should contact several lenders to make sure you’re getting the best price.
- Get a list of all fees, including any origination fees. Your loan agreement also could include prepayment penalty fees, late payment fees, bounced check fees, and check processing fees.
- Check your credit report. Regardless of what some lenders say, your credit rating plays a big role in how much you’ll pay to borrow money. Mistakes could lower your credit scores.